This English translation is provided for information purposes only. If any discrepancy is identified between thistranslation and the Japanese original, the Japanese original shall prevail.
February 25, 2022

Financial Report for the Fiscal Year Ended December 31, 2021
(January 1, 2021 – December 31, 2021)
Japan Hotel REIT Investment Corporation
Listing:
Securities code:
URL:
Representative:

Tokyo Stock Exchange8985
https://www.jhrth.co.jp/en/
Kaname Masuda, Executive Director

Asset Management Company:
Representative:
Contact:

Japan Hotel REIT Advisors Co., Ltd.
Hisashi Furukawa, President & CEO
Makoto Hanamura
Director of the Board, Head of Finance and Planning Division
Phone: +81-3-6422-0530

Scheduled date to file Securities Report: March 24, 2022
Scheduled date to start dividend payment: March 18, 2022
Preparation of supplementary material on financial report:
Schedule for presentation of financial results:

Yes
Yes (Analysts and institutional investors only)(Amounts are rounded down to the nearest million yen)

1. Status summary of operation and assets for the fiscal year ended December 31, 2021
(January 1, 2021 – December 31, 2021)(1) Operating results(Percentages show changes from the previous year)

Operating revenue

Operating income

Ordinary income

Net income

Fiscal year ended

JPY1M

%

JPY1M

%

JPY1M

%

JPY1M

%

December 31, 2021

13,633

(1.5)

2,959

(6.8)

1,298

(7.2)

1,296

(15.1)

December 31, 2020

13,838(51.1)

3,176(81.5)

1,398(90.9)

1,527(90.0)Net income per unit
Fiscal year ended
December 31, 2021
December 31, 2020
(Note)

Ordinary income tototal assets

Return on equity (ROE)

JPY
290
342

%
0.6
0.7

Ordinary income tooperating revenue
%
0.3
0.3

%
9.5
10.1

Net income per unit is calculated based on the period-average number of investment units issued.

(2) Cash distributions
Dividend per unit
(Excess of earnings
exclusive)

Total dividends(Excess of earnings
exclusive)

Dividend per unit
resulting fromexcess of earnings

Total dividends
from excess ofearnings

Fiscal year ended

JPY

JPY1M

JPY

JPY1M

%

%

December 31, 2021
December 31, 2020

366
410

1,634
1,829

－
－

－
－

126.1
119.8

0.7
0.8

Dividend to
net assets

Payout ratio(Note 1) The source of dividends for the fiscal year ended December 31, 2021, is calculated by adding appropriation for dividends (¥335 million) to unappropriatedretained earnings. For details of the appropriation for dividends, please refer to “<Reference Information 2> Dividend per unit and appropriation for
dividends” on page 15.
(Note 2) The source of dividends for the fiscal year ended December 31, 2020, is calculated by adding appropriation for dividends (¥305 million) to unappropriatedretained earnings. For details of the appropriation for dividends, please refer to “<Reference Information 2> Dividend per unit and appropriation for
dividends” on page 15.
(Note 3) Payout ratio is calculated using the following formula, rounded off to one decimal place.
Total dividends (total dividends from excess of earnings exclusive) ÷ Net income × 100- 1 -(3) Financial position
Total assets
JPY1M
394,323400,296

Fiscal year ended
December 31, 2021
December 31, 2020
(Note)Net assets

Equity ratio

JPY1M
221,542
221,201

%
56.2
55.3

Net assets per unit
JPY
49,59549,570Net assets per unit are calculated based on the total number of investment units issued and outstanding at the end of the fiscal year.

(4) Cash flows
Cash flows fromoperating activities
JPY1M
11,682
13,747

Fiscal year ended
December 31, 2021
December 31, 2020

Cash flows frominvesting activities
JPY1M(4,695)(3,077)

Cash flows from
Cash and cash equivalents
financing activities
at end of year
JPY1M
JPY1M
(5,543)29,996(16,461)
28,553

2. Operating forecast for the fiscal year ending December 31, 2022
(January 1, 2022 – December 31, 2022)(Percentages show changes from the previous year)
Operating revenue
JPY1M

Midterm
Full year(Note)-%-

Operating income
JPY1M

-

Ordinary income
%
-

JPY1M

-

Net income
%
-

JPY1M

-

Dividend per unit
(Excess of earnings
exclusive)

Dividend per unit
resulting from excessof earnings

JPY
-

JPY
-

%
-

It is continuously difficult to reasonably estimate the performance of hotels due to the spread of COVID-19. Because the share of variable rents andincome from management contracts that are linked to the performance of hotels in JHR’s earnings is large, operating forecast and forecast of dividend
for the fiscal year ending December 31, 2022 (from January 1, 2022 to December 31, 2022) are left as undetermined.

* Other(1) Changes in accounting policies, changes in accounting estimates, and restatement of financial statements for prior period after
error corrections(a) Changes in accounting policies due to revisions to accounting standards and other regulations: No change(b) Changes in accounting policies due to other reasons than above (a): No change(c) Changes in accounting estimates: No change(d) Restatement of financial statements for prior period after error corrections: No change(2) Total number of investment units issued and outstanding(a) Total number of investment units issued and outstanding at the end of the fiscal year(including investment units owned by Japan Hotel REIT Investment Corporation (JHR))
As of December 31, 2021
As of December 31, 2020(b) Number of JHR’s own investment units held at the end of the fiscal year
As of December 31, 2021
As of December 31, 2020

4,467,006 units
4,462,347 units
0 units
0 units(Note) For the number of investment units serving as the basis of computation of net income per unit, please refer to “Notes on per unit
information” on page 36.

* Financial reports are exempt from the audit by a certified public accountant or an auditing firm.
* Special items
Forward-looking statements presented in this financial report including operating forecasts are based on information currently
available to us and on certain assumptions we deem to be reasonable. As such, actual operating and other results may differ
materially from these forecasts due to a number of factors.

- 2 -○ Table of Contents
1. Operating results .............................................................................................................................................................................. 4(1) Operating results ............................................................................................................................................................................. 4(2) Material events related to going concern assumption .................................................................................................................... 16
2. Financial statements ....................................................................................................................................................................... 17(1) Balance sheets ............................................................................................................................................................................ 17(2) Statements of income ................................................................................................................................................................. 19(3) Statements of changes in net assets ............................................................................................................................................ 20(4) Statements of cash dividends ..................................................................................................................................................... 22(5) Statements of cash flows ............................................................................................................................................................ 23(6) Notes on going concern assumption ........................................................................................................................................... 24(7) Notes on matters concerning significant accounting policies ..................................................................................................... 24(8) Notes on change in the indication method.................................................................................................................................. 25(9) Notes on significant accounting estimates.................................................................................................................................. 25(10) Notes to financial statements...................................................................................................................................................... 26(11) Changes in total number of investment units issued and outstanding ........................................................................................ 38
3. Reference information .................................................................................................................................................................... 39(1) Information on values of assets under management, etc. ............................................................................................................. 39(2) Status of capital expenditures ...................................................................................................................................................... 52- 3 -1. Operating results(1) Operating results(A) Overview of the fiscal year under review(a) Brief history and principal activities
Japan Hotel REIT Investment Corporation (JHR) was established under the Act on Investment Trusts and Investment
Corporations (Act No. 198 of 1951, as amended; hereinafter referred to as the “Investment Trusts Act”) on November 10,
2005, and was listed on the Real Estate Investment Trust (REIT) section of the Tokyo Stock Exchange (Securities code: 8985)
on June 14, 2006.
JHR entrusts asset management to Japan Hotel REIT Advisors Co., Ltd. (hereinafter referred to as the “Asset Management
Company”). Focusing on importance as social infrastructure and profitability as investment real estate of hotels, JHR
primarily invests in real estate which are wholly or partially used as hotels or real estate equivalents of such real estate or
related assets that are backed by such real estate or real estate equivalents (hereinafter referred to as “Real Estate for Hotels,etc.”).
JHR, the former Nippon Hotel Fund Investment Corporation, merged with Japan Hotel and Resort, Inc. with an effective dateof April 1, 2012 (hereinafter referred to as the “Merger”), and changed its name to Japan Hotel REIT Investment Corporation.
Since the Merger through the end of the fiscal year under review (12-month period from January 1, 2021 to December 31,2021), JHR has carried out nine public offerings for capital increase and continuously acquired “highly competitive hotels”
in mainly “strategic investment areas” where domestic and inbound leisure demand can be expected over the medium to longterm.
By implementing the aforementioned growth strategy, JHR has expanded its asset size while improving the quality of its
portfolio through new property acquisitions of 26 properties amounting to ¥275,160 million (acquisition price basis) in total
in the little less than ten years since the Merger through the end of the fiscal year under review. As a result, JHR had aportfolio of 41 properties with a combined acquisition price of ¥363,542 million, and the total number of investment units
issued and outstanding stood at 4,467,006 units at the end of the fiscal year under review.
(b) Investment performance for the fiscal year under review
The Japanese economy in the fiscal year under review (12-month period from January 1, 2021 to December 31, 2021) was
in a severe situation due to the impact of state-of-emergency declarations, stricter measure to prevent the spread of the virus,
etc. implemented in line with the spread of COVID-19, but gradually showed movements of picking up in and after Octoberwhen the state-of-emergency declaration was lifted with improvement in the COVID-19 situation.
The domestic accommodation and tourism market was heavily impacted by the low number of foreign visitors to Japan(hereinafter referred to as “inbound visitors”), which was estimated to be 245,000 in 2021 (-94.0% from the previous year;-99.2% from 2019), due to travel restrictions to Japan from various countries, etc., as well as the sluggish domestic demand
due to the worsening of the COVID-19 situation. Accordingly, the cumulative number of overnight guests at domestic
accommodation facilities in 2021 fell by 4.8% from the previous year or fell by 47.0% from 2019 to 315 million guest nights(preliminary release).
As to the performance of hotels owned by JHR under these circumstances, RevPAR (Note 1) of the 24 Hotels with Variable
Rent, etc. (Note 2) for the fiscal year under review fell below that of the previous year by 5.4% due to the impact of the
spread of COVID-19, but GOP (gross operating profit) increased from the previous year by 47.4% due to the effects of costmanagement measures at hotels, etc.
Under such circumstances, JHR maintained, as it did in the previous year, close communication with the lessees and operatorsof its respective hotels and worked to secure hotel earnings through reduction of operating costs, etc. In particular, HotelManagement Japan Co., Ltd. (hereinafter referred to as “HMJ”), which is a group company of the Asset Management
Company, and its subsidiaries (hereinafter collectively referred to as the “HMJ Group”), implemented large-scale
restructuring (such as reduction of labor costs through closure of unprofitable restaurants within hotels, reduction ofoutsourcing costs with the switch from outsourcing to insourcing and change of specifications, and consolidation of backoffices and common operations) upon conclusion of contracts to change fixed-term building lease contracts on August 25,
2020, and resulted in achieving results that were better than initially planned.

- 4 -In conjunction, JHR changed lessees and conducted rebranding during the fiscal year under review in order to improve hotel
operations and increase earnings as follows. In January 2021, for Chisun Hotel Kamata (former name: Hotel Vista Kamata
Tokyo), JHR changed lessees and conducted rebranding after terminating the existing lease contract. In addition, JHRchanged lessees and conducted rebranding to the HMJ Group for Hotel Oriental Express Fukuoka Tenjin (former name:
HOTEL ASCENT FUKUOKA) in June 2021 and for Oriental Hotel Universal City (former name: Hotel Keihan Universal
City) in July 2021, and also conducted rebranding to the HMJ Group for Oriental Hotel Okinawa Resort & Spa (former name:
Okinawa Marriott Resort & Spa) in October 2021. These have led to more efficient operations being promoted, such as
through sharing of human resources and back offices with the HMJ Group Hotels located in the surrounding areas.
Furthermore, with the improving earnings structure of hotel operations through the restructuring by HMJ Group, the amountof rent JHR will receive during the hotel market recovery period is expected to increase.
Moreover, JHR decided that it is appropriate to partly realize unrealized gain of owned assets to record it as gain on sales ofreal estate properties and enhance the liquidity on hand. Accordingly, JHR sold ibis Tokyo Shinjuku on December 15, 2021,
recording ¥3,258 million as gain on sales of real estate properties. On the other hand, on July 30, 2021, In addition, JHR
acquired land that is part of the site of Oriental Hotel Universal City upon the expiration of the ground lease contract with
the City of Osaka. Through this, the hotel is now real estate under full ownership and there is no need to pay ground rent of¥21 million a year.
Moreover, JHR made a drastic review of its capital expenditures, including postponement of large-scale renovation work
planned for the fiscal year under review, and also worked to reduce costs under such cost items as real estate operating costs
and general and administrative expenses through discussions with related parties and other measures. For further details ofsales, GOP (gross operating profit) and other management indicators for the 24 Hotels with Variable Rent, etc., please referto “<Reference Information 1> Hotel operation indexes, sales and GOP (gross operating profit)” on page 14.
(Note 1)

RevPAR represents Revenue Per Available Room, which is calculated by dividing total rooms revenue for a certain period (including
service charges) by the total number of rooms available for sale during the period. The same shall apply hereinafter in this document.

(Note 2)The hotel group combining the hotels which JHR leases to HMJ (Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba
Oriental Hotel, Hotel Nikko Alivila and Oriental Hotel Hiroshima (hereinafter referred to as the “Five HMJ Hotels”)), with the hotels
which JHR leases to HMJ subsidiaries (Oriental Hotel Okinawa Resort & Spa, Sheraton Grand Hiroshima Hotel (main facility of
ACTIVE-INTER CITY HIROSHIMA), Oriental Hotel Fukuoka Hakata Station, Holiday Inn Osaka Namba, Hilton Tokyo Narita Airport,
International Garden Hotel Narita, Hotel Nikko Nara, Hotel Oriental Express Osaka Shinsaibashi, and Hilton Tokyo Odaiba), totaling 14
hotels, are referred to as the HMJ Group Hotels. Although the lessee of Hotel Oriental Express Fukuoka Tenjin was changed on June 18,
2021, and the lessee of Oriental Hotel Universal City was changed on July 1, 2021, to HMJ subsidiaries, these are not included in the
HMJ Group Hotels in the fiscal year under review. The 24 Hotels with Variable Rent, etc. refers to the HMJ Group Hotels plus ibis Tokyo
Shinjuku (completed its transfer on December 15, 2021), ibis Styles Kyoto Station, ibis Styles Sapporo, Mercure Sapporo, Mercure
Okinawa Naha, Mercure Yokosuka, the b suidobashi, the b ikebukuro, the b hachioji and the b hakata, totaling 24 hotels. The same shallapply hereinafter in this document.

(c) Funding status
In the fiscal year under review (12-month period from January 1, 2021 to December 31, 2021), JHR procured ¥300 million
through third-party allotment with the sponsor group as the allottee in March 2021, and took out loans of ¥6,800 million in
total to refinance existing borrowings that were due for repayment in the same month. In addition, JHR took out loans of¥935 million in total in June 2021 and ¥15,847 million in total in September 2021 to similarly refinance existing borrowings
that were due for repayment. Moreover, JHR redeemed the fourth unsecured investment corporation bonds of ¥1,500 million
due for redemption in December 2021 by taking out loans in the same amount mainly with main banks. JHR also used partof the funds from the sale of ibis Tokyo Shinjuku, which was sold in the same month, for partial early repayment of existing
borrowings, reducing the ratio of interest-bearing debt to total assets by 0.9 points in an effort to strengthen financial
soundness.
Consequently, as of the end of the fiscal year under review, the balance of interest-bearing debt totaled ¥164,754 million,
including short-term loans payable of ¥24,002 million, current portion of long-term loans payable of ¥8,434 million, longterm loans payable of ¥92,218 million, current portion of investment corporation bonds of ¥6,000 million and investment
corporation bonds of ¥34,100 million, and the ratio of interest-bearing debt to total assets (Note) at the end of the fiscal year
under review stood at 41.8%. The ratio of fixed interest rate to total interest-bearing debt at the end of the fiscal year underreview was at 85.3%.
- 5 -(Note)Ratio of interest-bearing debt to total assets at end of period = Balance of interest-bearing debt at end of period ÷ Total assets at end of
period × 100

As of the end of the fiscal year under review, JHR’s issuer ratings were as follows:
Rating agency

RatingJapan Credit Rating Agency, Ltd. (JCR)A+(Negative)

Rating and Investment Information, Inc.
(R&I)

A

(Negative)(d) Financial results
As a result of the abovementioned asset management, operating revenue, operating income and ordinary income were¥13,633 million, ¥2,959 million and ¥1,298 million, respectively, for the fiscal year under review (12-month period fromJanuary 1, 2021 to December 31, 2021). Net income was ¥1,296 million. With regard to dividends, it was decided that ¥1,634
million will be distributed, which was calculated by adding a reversal of reserve for temporary difference adjustment(appropriation for dividends) of ¥335 million to unappropriated retained earnings of ¥1,300 million. Consequently, thedividend per unit came to ¥366. For details of the appropriation for dividends for the fiscal year under review, please refer to“<Reference Information 2> Dividend per unit and appropriation for dividends” on page 15.
(B) Outlook for the next fiscal year(a) Investment policies and issues to be addressed
The Japanese economy remains in a severe situation due to the impact of the spread of infection by COVID-19. In 2021,
signs of picking up were seen with the increasing moves to gradually ease movement restrictions due to progress in thevaccination rollout and other factors through the second half of the year. In 2022, however, variants of COVID-19 caused thenumber of confirmed new cases of infection to sharply rise in various areas from the beginning of the year, leading toapplication of a stricter measure to prevent the spread of the virus, etc. in various regions again and other factors turning thesituation into an uncertain outlook. In the domestic accommodation and tourism market, although upcoming recovery indemand is expected as the third-dose vaccination rollout progresses, effective drugs for treating COVID-19 are developed
and put into practical use, etc., a harsh environment is forecast for the time being. On the other hand, the pace of recovery indomestic travel demand will likely be fast if the COVID-19 situation improves to a certain level like that in November
through December 2021.
JHR will continue to discuss, investigate and implement with lessees and operators a variety of measures, such as reducing
operating costs through review of operations at each hotel, maintaining necessary employment, handling cash management,
and also implementing sales measures in response to new demand including “staycation” and “workation.” Especially for the
hotels with variable rent, etc., JHR will endeavor to maximize GOP of each hotel and thus maximize the rent JHR can receive
as a result. In particular, with the HMJ Group, a strategic partner of JHR, in addition to strengthening the initiatives of thelarge-scale restructuring plan mentioned earlier and pursuing further consistent cost reduction, measures to create and capture
demand will be proactively promoted, such as making attractive products with the hotel itself as the tourism destination andincreasing brand awareness through TV commercials, etc., conducting initiatives from both sides to enhance profitability.
In addition, if JHR receives requests for rent reduction, etc. from the lessees that have been impacted by the spread of infection
by COVID-19, etc., JHR will examine what has been requested from respective lessees, the details of the existing lease
contracts with them, rent levels compared with the market rent, the possibility to collect the reduced rent portion in the future,and their financial conditions. By doing so, JHR will respond to requests individually after discussing with each lessee andoperator, while carefully considering the possibility of replacing operators. With the HMJ Group, in the contracts to change
fixed-term building lease contracts concluded on August 25, 2020, mentioned earlier in “(A) Overview of the fiscal year
under review; (b) Investment performance for the fiscal year under review” on page 4, JHR agreed to set all rent as variable
rent only from February 2021 through the end of 2021. In light of the situation of the spread of infection by COVID-19 andother factors, agreement has been reached to similarly set all rent to be variable rent only throughout 2022, too, by conclusionof memorandums of understandings related to change fixed-term building lease contracts on February 25, 2022. For details,
please refer to “(b) Significant subsequent events; Conclusion of memorandums of understanding related to change fixedterm building lease contracts” later in this document on page 10.

- 6 -On the other hand, given the large potential demand for overseas tourism globally, particularly due to the improvement inincome levels in Asian countries, the popularity of Japan as a travel destination, etc., JHR believes that Japan’s
accommodation demand from inbound visitors will recover over the medium to long term. As such, there is no change in theview of JHR that the accommodation and tourism market will expand over the medium to long term. On the belief that thelocation and competitiveness of individual hotels as well as the capabilities of operators (the ability to differentiate from otherhotels, improve profitability including cost management and capture recovering demand, etc.) will lead to differentiation of
performance among hotels, JHR will continue to implement strategies to differentiate its hotels as it has done to date.
In the meanwhile, as a result of the spread of infection by COVID-19, contactless behavior patterns, such as web conferencing,have spread, and these may cause structural changes in the hotel industry, for instance, a reduction in banquet demand. JHR
will work more closely than ever with hotel lessees and operators to flexibly respond to the changes. Under the recognitionof such circumstances, JHR intends to work with the Asset Management Company to continue to implement strategies todifferentiate by utilizing the experience it has cultivated as a J-REIT specializing in hotels, and manage assets based on theapproach described below.
Internal growth
JHR will work to secure “stability” mainly with fixed rent contracts, while at the same time aim for “upside potential” throughimplementation of active asset management strategies which proactively pursue greater profitability and asset value inproperties by way of a variety of measures such as expanding international brands and coordinating with HMJ.
For properties with fixed-rent contracts, JHR will continue to focus on setting and maintaining appropriate rents based onrent levels in the market where respective hotels are located or each tenant’s creditworthiness and ability to bear the rent
costs, and aiming at raising rents (including introduction of a revenue-sharing structure) in accordance with the conditions of
the accommodation market while appropriately responding to requests for reduction of fixed rent from lessees greatly affectedby COVID-19.
For hotels under variable rent contracts and under a management contract structure, JHR is working to increase variable rent,
etc. and reduce management contract fees by implementing active asset management strategies.
In 2021, JHR changed lessees and conducted rebranding to the HMJ Group for Hotel Oriental Express Fukuoka Tenjin(former name: HOTEL ASCENT FUKUOKA) in June and for Oriental Hotel Universal City (former name: Hotel Keihan
Universal City) in July. Each was aimed at achieving more efficient operations, such as through sharing of human resources
and back offices with the HMJ Group Hotels located in the surrounding areas. Furthermore, JHR aims to maximize revenue
from the hotels in the recovery period of domestic demand by upgrading the hotel grade from economy to mid-price in thecase of the former and as a theme park hotel adjacent to Universal Studios Japan in the case of the latter. JHR has adopted arent scheme that combines fixed rent and variable rent in the lease contract with the HMJ Group. Under the scheme, the rent
burden ratio has risen compared with the former lease contract, and thus the amount of rent JHR will receive during themarket recovery period is expected to increase.
In addition, in October 2021, JHR conducted rebranding to the HMJ Group for Oriental Hotel Okinawa Resort & Spa (former
name: Okinawa Marriott Resort & Spa) upon the expiration of the franchise contract. The HMJ Group is deploying its
branding strategy of “Oriental Hotels & Resorts” since 2021 in order to further strengthen its effort to capture business andleisure demand. JHR believes that, with the brand development by the HMJ Group, increase in hotel revenue can be expectedfrom the “Oriental Hotel” brand penetration, and that will contribute to improvement of the revenue of JHR’s portfolio.
i) Properties under variable rent contracts
JHR works to enhance the profitability of its properties under variable rent contracts through its active asset management
strategies. JHR has adopted world-leading international brands such as Hilton, Sheraton, Mercure and Holiday Inn as well as
leading brands in Japan including Oriental Hotel and Hotel Nikko that are operated in various areas throughout the country
and, together with excellent operators, aims to increase variable rent, etc. through improved performance of these hotels. JHR
coordinates with the operators in an effort to enhance hotel performance by requesting them to implement marketing
initiatives to attract a wider range of demand with considerations given to recovery of leisure demand from domestic andinbound visitors, measures to maintain and increase room rates, and realization of synergy effects like cost reductions fromoperating multiple properties, among other efforts.
- 7 -On the other hand, under the impact of the spread of infection by COVID-19, recovery in hotel performance is expected totake a certain level of time. To cope with such a situation, JHR will closely cooperate with the lessees and operators ofrespective hotels to promote drastic reform of the earnings structures of hotels through various cost-cutting measures centeredon thoroughly enhancing efficiency of the operating system, while continuing efforts on consideration for the health of guests
and employees of respective hotels and environmental sanitation management. JHR will also promote various measures torestore hotel earnings, such as the creation of appropriate products in response to major changes in the market environment
and the preparation of hotel facility environments.
Moreover, JHR will strive to recover and improve hotel earnings by implementing strategic capital expenditure (CAPEX) as
necessary through accurately grasping the conditions in the domestic accommodation and tourism market, and changing
customers’ needs.
ii) Properties under fixed rent contracts
JHR will monitor operating conditions of these hotels appropriately, pay careful attention to each lessee’s ability to bear thecost of rent, and pursue efforts to set and maintain reasonable rent, while appropriately responding to requests for reductionof fixed rent from lessees greatly affected by the spread of infection by COVID-19. In addition, JHR will continuously
execute investment to maintain and renew facilities and equipment in order to ensure each hotel becomes prominent in themarket and to maintain and enhance asset value.
External growth
In terms of external growth strategy, JHR believes that domestic and inbound leisure demand will recover over the medium
to long term and will continue targeting acquisition of highly competitive Real Estate for Hotels, etc. (Hotel Assets) in areas
which can expect “domestic and inbound leisure demand” over the medium to long term as it has done to date. In addition,
JHR will build a portfolio which can secure stable revenues with future growth potential in mind in order to achieve upside
gains.
Upon acquiring properties, JHR will focus on infrastructure aspects of the relevant Hotel Assets such as buildings andfacilities, services aspects such as the credibility of the hotel lessee and operator (including the ability of the hotel lessee tobear the cost of rent) as well as operation and management capabilities, and the properties’ locational superiority that serves
as the base for stability in demand and growth potential.
Specifically, JHR will aim to invest in “full-service hotels” and “resort hotels” that pose barriers to new opening due to suchfactors as operation and management know-how required for operating the hotels and limitations in terms of invested capitaland location. As for “limited-service hotels,” JHR emphasizes the credibility and operation capabilities of the hotel lessee
and operator as well as the building age, location, guestroom composition, profitability, etc. of the properties. Moreover, JHR
will take a particularly selective approach to hotels specialized for accommodation and of a budget type (low price zone) thatmainly offers single rooms and where the source of competitiveness relies only on prices.

- 8 -In the hotel transaction market, although hotel transactions had remained stagnant due to a sense of uncertainty over thedomestic accommodation and tourism market stemming from the impact of COVID-19 and transactions continued to be stilla low volume in also 2021, transactions, including those involving large properties, have started to show movement.
Furthermore, there is also increasing possibility of special investment opportunities unlike before, such as sales of assets due
to rapid deterioration in the financial position of operators, sales of hotels which are non-core assets due to deterioration in
main business performance, sales of hotels completed or scheduled to be completed without operators, etc. JHR will flexibly
deal with such investment opportunities by utilizing the efficient hotel operation platform of HMJ and such. Moreover, overthe medium to long term, JHR believes that, along with the spread of infection by COVID-19 coming to an end andaccompanying recovery of domestic accommodation demand including that from inbound visitors, many investors who havebeen on the sideline may resume investment in hotels, and competition over acquisition may become more active. Goingforward, while closely monitoring market trends from many angles, JHR will flexibly respond to changes in earnings
structures of hotels and the investment environment by leveraging the strengths and advantages it has cultivated as a J-REIT
specializing in hotel investment and JHR will aim to expand asset size that accompanies improvement of the portfolio quality
through acquiring highly competitive properties, while utilizing the operation platform of HMJ Group as necessary.
Considering the uncertainty of the hotel market environment due to the impact of COVID-19, JHR intends to be careful withproperty acquisition for the time being, from the standpoint of procurement of new funds for property acquisition. In addition,from a comprehensive standpoint including financial soundness and portfolio management, JHR will also consider asset
replacement accompanying property disposition as necessary.
Finance strategy
As the impact of the spread of infection by COVID-19 prolongs and the outlook of earnings remains uncertain, JHR will
focus on the enhancement of financial stability and soundness more than before and intends to maintain and enhance therelationship of trust with financial institutions with which it does business through close communication and such.
Specifically, JHR will work to securely achieve refinancing of existing borrowings while paying attention to financing costs
and maintaining good relationships with respective lenders. In addition, JHR will secure liquidity on hand in an effort tostrengthen its financial foundation through appropriate control of capital expenditures and property disposition, if necessary,
etc. It aims to conduct financial operations by keeping the ratio of interest-bearing debt to total assets at no larger than 50%
as in the past, but maintains roughly the current level for the time being. In addition, when seeking new borrowing forproperty acquisitions, JHR will work to disperse the maturity dates of its debt as well as further reinforce its composition oflenders and further diversify funding methods, such as issuance of investment corporation bonds (including green bonds),
while considering the balance with the funding costs.
Policy on handling of negative goodwill
From the fiscal year ended December 31, 2017 (18th period), JHR started appropriation for dividends through reversal ofreserve for temporary difference adjustment in connection with partial amendments to the “Ordinance on Accounting ofInvestment Corporations” (Cabinet Office Ordinance No. 47 of 2006, as amended; hereinafter referred to as the “Ordinanceon Accountings of Investment Corporations”) and the “Regulation for Real Estate Investment Trusts and Real Estate
Investment Corporations” of The Investment Trusts Association, Japan. JHR stipulated a policy to reverse ¥262 million(hereinafter called the “50-year amortization amount of negative goodwill”), which is an amount equivalent to 2% (1/50) of
the balance of the reserve for temporary difference adjustment for the fiscal year ended December 31, 2017, to pay out as
dividends every year, with the balance of the reserve for temporary difference adjustment remaining at the time of reversal
set as the maximum reversal amount (Note 1).
Furthermore, in cases of incurrence of losses caused by property dispositions, impairment loss of assets, dilution of dividend
per unit due to the issuance of new investment units through public offerings, etc., loss on retirement of noncurrent assets,
and suspension of sales and such due to large-scale renovations with significant impact on revenues, JHR stipulated a policy
to reverse additional portion of the negative goodwill on top of the 50-year amortization amount of negative goodwill (¥262
million) (Note).
(Note)The policy may change due to a resolution of the board of directors, and it does not guarantee the method of reversing the reserve fortemporary difference adjustment, and amounts to be reversed, etc., in the future.

- 9 -Initiatives for sustainability
In recent years, consideration for ESG (Environment, Social and Governance) has grown in importance in the investment
management industry from the standpoint of long-term sustainability. JHR recognizes that conducting real estate investment
management that considers for ESG is important to maximize unitholder value and to further raise the attractiveness of JHR.
In addition, JHR believes that it is indispensable to establish favorable relationships with its stakeholders, including
unitholders, hotel guests, lessees, operators, business partners such as property managers, local communities, and officers
and employees of the Asset Management Company, and to fulfill our social responsibilities expected from each of them.
In order to put such ideas into practice, JHR, along with the Asset Management Company, has established a “Sustainability
Policy” as guidance to ESG initiatives. We have promoted efforts to reduce environmental impact at properties in our portfolio
based on this policy, and received the Building-Housing Energy-efficiency Labeling System (BELS) evaluation for Hotel
Nikko Alivila and Mercure Okinawa Naha in February 2018 as first such cases for hotel properties owned by a J-REIT (Note1). In September 2018, JHR became the first J-REIT specializing in hotels to be recognized by GRESB (Note 2) for its
environmental awareness and sustainability initiatives, and acquired “Green Star” in the GRESB Real Estate Assessment for
four consecutive years thereafter. Moreover, for the second consecutive year, JHR was selected as a Sector Leader of Asian
Hotel Sector in the GRESB Real Estate Assessment conducted in 2021. In April 2020, Hilton Tokyo Odaiba acquired
CASBEE (Comprehensive Assessment System for Built Environment Efficiency) Certification for Buildings, the first such
recognition for an existing hotel property. In May 2021, Oriental Hotel Fukuoka Hakata Station also acquired CASBEE
Certification for Buildings, the second case of such for an existing hotel property following Hilton Tokyo Odaiba. In addition,
in December 2021, JHR defined its materiality (key issues) in terms of ESG from the dual standpoints of stakeholder
expectations and impact on its business. Also, the Asset Management Company expressed support for the recommendationsof the Task Force on Climate-related Financial Disclosures (TCFD) established by the Financial Stability Board (FSB), andjoined the TCFD Consortium, an organization made up of Japanese companies that support the recommendations. Goingforward, JHR, together with the Asset Management Company, will continue to actively promote enhancement of its initiatives
and disclosure on a variety of sustainability issues.
Furthermore, JHR issued green bonds in July 2019 to allocate funds mainly to refinancing of loans procured for funding
investment capital and constructions cost, etc. for equipment which contribute to environment, including reduction of CO２
and water consumption in the renovation work at Oriental Hotel Fukuoka Hakata Station. It was the first case of a J-REIT
specializing in hotels issuing green bonds. Of the funds procured from the green bonds, the remaining funds, excluding therepayment of such loans, were used to fund renovation work, etc. at other hotels, and during the fiscal year under review,
JHR allocated funds to construction costs for reduction of CO２, etc. at four hotels including Hilton Nagoya. As a result, thefunds procured from the green bonds have been fully appropriated for eligible projects and there is no unappropriated balance.
In addition, as an effort under the spread of infection by COVID-19, JHR worked together with the lessees to provide a totalof nine hotels it owns as facilities to accept patients with mild or no symptoms who do not require hospital treatment among
the patients infected with COVID-19 from 2020 through the date of this document. JHR also provided restaurants and banquet
rooms in Oriental Hotel tokyo bay and Hotel Nikko Nara as venues for vaccination under workplace vaccination programs
and for local residents. Furthermore, the HMJ Group conducted workplace vaccination to provide vaccinations to its
employees who wish to be vaccinated so that hotel guests can use the hotels safely with peace of mind.
Recognizing its social responsibility towards local communities as a J-REIT specializing in hotels, JHR will continue toproactively carry out social contribution activities capitalizing on the characteristics of the hotel sector and each hotel.
(Note 1)

Investigated by the Asset Management Company based on public information.

(Note 2)GRESB which stands for Global Real Estate Sustainability Benchmark is an annual benchmarking assessment to measure ESG(Environmental, Social and Governance) considerations of real estate companies and funds. It evaluates initiatives for sustainability ofreal estate companies, REITs and real estate funds, not of individual properties. The GRESB Rating makes relative assessment based on
total scores, with 5 Stars being the highest ranking.

(b) Significant subsequent events
Conclusion of memorandums of understanding related to change fixed-term building lease contracts
On February 25, 2022, board of directors meeting of JHR resolved to conclude memorandums of understanding relating tochange fixed-term building lease contracts in relation with contracts to change fixed-term building lease contracts dated
August 25, 2020 (hereinafter “Previous Contracts for Change”) on 14 properties listed in chart (1) Fixed rent below among
16 properties leased to HMJ Group as tenant in order to change leasing structure for fiscal year 2022. And JHR concluded- 10 -

the memorandums of understanding on the same date. Although JHR believes that hotel market will gradually recover during
fiscal year 2022 due to progress of vaccination and development of therapeutic medicine in addition to supporting measuresby national and local governments to promote tourism, speed of recovery and downside risks are difficult to make reasonableestimate. Therefore, as we did in Previous Contracts for Change dated August 2020, we decided to exempt annual fixed rent
in total JPY 8,030 million and adopt full variable rent structure. Base amount of AGOP (*1) and payment ratio of variable
rent when AGOP exceed the base amount are unchanged from last change. In addition, rent after 2023 is unchanged fromrent structure for 2022 which structured in Previous Contracts for Change.
Please see below for detail of changes.
(1) Fixed rent
Fixed rent
No

Name

1
2
3
4
5

8

Kobe Meriken Park Oriental Hotel
Oriental Hotel tokyo bay
Namba Oriental Hotel
Hotel Nikko Alivila
Oriental Hotel Hiroshima
Oriental Hotel Okinawa
Resort & Spa
ACTIVE-INTER CITYHIROSHIMA(Sheraton Grand Hiroshima Hotel)
Oriental Hotel Fukuoka Hakata
Station9

Holiday Inn Osaka Namba

10

Hilton Tokyo Narita Airport

11

International Garden Hotel Narita

12

Hotel Nikko Nara

13

Hotel Oriental Express Osaka
Shinsaibashi

14

Hilton Tokyo Odaiba

Tenant

Before change
From FY2022 onwards

6
7

After change
FY2022

From FY2023 onwards

Hotel Management
Japan Co., Ltd.

JPY 3,221MM/year

JPY 3,221 MM/year

Lagoon resort Nago
Co., Ltd.

JPY 550 MM/year

JPY 550 MM/year

K.K. A.I.C Hiroshima
Management

JPY 348 MM/year

JPY 348 MM/year

Hotel Centraza Co.,Ltd.
OW Hotel OperationsKK
KK Narita Kosuge
Operations
KK Narita Yoshikura
Operations
Hotel Management
Co., Ltd.
K.K. HOTELORIENTAL
EXPRESSTokyo Humania
Enterprise Inc.

JPY 425 MM/year

Not
applicable

JPY 425 MM/year

JPY 576 MM/year

JPY 576 MM/year

JPY 444 MM/year

JPY 444 MM/year

JPY 336 MM/year

JPY 336 MM/year

JPY 420 MM/year

JPY 420 MM/year

JPY 110 MM/year

JPY 110 MM/year

JPY 1,600 MM/year

JPY 1,600 MM/year- 11 -

(2) Variable rent

Calculation method of variable rent
No

Name of Property

Before revision

After revision

From FY 2022 onwards
1

Kobe Meriken Park Oriental Hotel

2

Oriental Hotel tokyo bay

3Namba Oriental Hotel

4

Hotel Nikko Alivila

5

Oriental Hotel Hiroshima

6

Oriental Hotel Okinawa Resort & Spa

7

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

8

Oriental Hotel Fukuoka Hakata Station

9

Holiday Inn Osaka Namba

10

Hilton Tokyo Narita Airport

11

International Garden Hotel Narita

12

Hotel Nikko Nara

13

Hotel Oriental Express Osaka
Shinsaibashi

14

Hilton Tokyo Odaiba

FY 2022

From FY 2023 onwards

AGOP x 86.0％(Total AGOP of The Five HMJ
Hotels (Note 3) – base amount(¥4,120 million/year (Note 4)))x 85.0%

AGOP x 79.0％
AGOP x 91.0％
AGOP x 74.0％(Total AGOP of The Five HMJ
Hotels (Note 3) – base amount(¥4,120 million/year (Note 4)))x 85.0%

AGOP x 89.0％(AGOP – base amount(¥655 million/year)) x 95.0%(AGOP – base amount(¥360 million/year)) x 90.0%(AGOP – base amount(¥442 million/year)) x 98.0%(AGOP – base amount(¥580 million/year)) x 97.0%(AGOP – base amount(¥450 million/year)) x 93.0%(AGOP – base amount(¥360 million/year)) x 98.0%(AGOP – base amount(¥440 million/year)) x 95.0%(AGOP – base amount(¥128 million/year)) x 91.0%(AGOP – base amount(¥1,660 million/year)) x 98.0%

AGOP x 89.0％
AGOP x 93.0％
AGOP x 97.0％
AGOP x 98.0％
AGOP x 95.0％
AGOP x 95.0％
AGOP x 95.0％
AGOP x 87.0％
AGOP x 97.0％(AGOP – base amount(¥655 million/year)) x 95.0%(AGOP – base amount(¥360 million/year)) x 90.0%(AGOP – base amount(¥442 million/year)) x 98.0%(AGOP – base amount(¥580 million/year)) x 97.0%(AGOP – base amount(¥450 million/year)) x 93.0%(AGOP – base amount(¥360 million/year)) x 98.0%(AGOP – base amount(¥440 million/year)) x 95.0%(AGOP – base amount(¥128 million/year)) x 91.0%(AGOP – base amount(¥1,660 million/year)) x 98.0%(Note 1) AGOP (adjusted GOP) is the amount calculated by subtracting certain fees and other items from GOP. GOP (Gross Operating Profit) is amount calculated
by subtracting various cost for hotel operation (personal cost, general administration cost, etc.) form sales of the hotel.
(Note 2) Stating detail of contract for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.
(Note 3) Five HMJ Hotels are 5 hotels which JHR leases to HMJ (Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba Oriental Hotel, Hotel Nikko
Alivila and Oriental Hotel Hiroshima.
(Note 4) The breakdown of the AGOP base amount of The Five HMJ Hotels (¥4,120 million/year) are as follows. Kobe Meriken Park Oriental Hotel ¥690,000
thousands, Oriental Hotel tokyo bay ¥1,060,000 thousands, Namba Oriental Hotel ¥890,000 thousands, Hotel Nikko Alivila ¥1,250,000 thousands, and Oriental
Hotel Hiroshima ¥230,000 thousands.

(3) Impact on profit and loss by conclusion the memorandum of understandings.
Although fixed rent in amount of JPY 8,030 MM will be reduced from operating revenue due to the conclusion of memorandums ofunderstanding, variable rent will be determined by AGOP of full year for fiscal year 2022. Therefore, it is difficult to reasonably estimate
amount of the impact at this point.

- 12 -

(c) Operating forecast
As the impact of the spread of infection by COVID-19 continues, it is continuously difficult at this point to reasonably
estimate the performance of hotels through the end of December 2022. Because the share of variable rents and income frommanagement contracts that are linked to the performance of hotels in JHR’s earnings is large, it is difficult to reasonably
estimate earnings for the midterm of the fiscal year ending December 31, 2022 (23rd period) and the full year of the fiscal
year ending December 31, 2022 (23rd period) of JHR.
Therefore, the operating forecast and forecast of dividend are left as undetermined and will be disclosed as soon as it becomes
possible to disclose going forward.
Midterm of the fiscal year ending December 31, 2022 (23rd period)
Operating revenue

TBD

Operating income

TBD

Ordinary income

TBD

Net income

TBD

Full year of the fiscal year ending December 31, 2022 (23rd period)
Operating revenue

TBD

Operating income

TBD

Ordinary income

TBD

Net income

TBD

Dividend per unit

TBD

Dividend per unit resulting fromexcess of earnings

TBD- 13 -

<Reference Information 1> Hotel operation indexes, sales and GOP (gross operating profit)
The numeral figures are based on figures obtained from hotel lessees, etc. Please note that these figures have not been
audited nor have they gone through other procedures. No guarantee is made as to the accuracy or completeness of the
figures and information.
ADR and RevPAR are rounded off to the nearest yen. Sales and GOP are rounded off to the nearest million yen. Occupancy
rate and comparison with the previous period are rounded off to one decimal place.
<1> The HMJ Group Hotels
Fiscal year ended December 31, 2020
Comparison withprevious period

ResultOccupancy rate

First half ofthe year
Second halfof the year
Full year

ADR(Note 1)First half ofthe year
Second halfof the year
Full year

RevPAR(Note 2)First half ofthe year
Second halfof the year

Sales
(JPY1M)First half ofthe year
Second halfof the year

Full year

Full year

GOP(JPY1M)First half ofthe year
Second halfof the year
Full year

Fiscal year ended December 31, 2021
Comparison withprevious period

Result33.1%(52.2pt)

27.7%(5.4pt)38.4%(49.5pt)

49.0%

10.6pt35.8%(50.8pt)

38.5%

2.7pt

15,222(13.4%)

13,048(14.3%)

16,814(14.4%)

14,636(13.0%)

16,081(13.7%)

14,068(12.5%)

5,045(66.4%)

3,618(28.3%)

6,460(62.6%)

7,179

11.1%

5,757

(64.3%)

5,413(6.0%)

9,167(61.9%)

8,313(9.3%)

11,978(55.9%)

12,765

6.6%

21,146(58.7%)

21,078(0.3%)(370)(105.1%)

(136)

－%

1,696

(82.8%)

2,186

28.9%

1,326

(92.3%)

2,050

54.7%

(Note 1) ADR: Represents average daily rate, which is calculated by dividing total rooms revenue for a certain period (including service charges) by
the total number of rooms sold during the period. The same shall apply hereinafter.
(Note 2) RevPAR: Represents revenue per available room, which is calculated by dividing total rooms revenue for a certain period (including service
charges) by the total number of rooms available for sale during the period. The same shall apply hereinafter.

- 14 -

<2> The 24 Hotels with Variable Rent, etc.
Fiscal year ended December 31, 2020
Comparison withprevious period

ResultOccupancy rate

First half ofthe year
Second halfof the year

ADR

Full year

RevPAR(51.1pt)

30.6%(3.3pt)40.8%(46.1pt)

49.6%

8.9pt

37.4%

(48.6pt)

40.2%

2.8pt

13,362(14.8%)

10,846(18.8%)

13,354(22.6%)

12,313(7.8%)

13,357(19.0%)

11,757(12.0%)

4,536(66.0%)

3,320(26.8%)

5,445(63.7%)

6,112

12.2%

4,993

(64.8%)

4,724(5.4%)

10,718(62.1%)

9,478(11.6%)

13,378(57.5%)

14,3097.0%

24,096(59.6%)

23,786(1.3%)(213)(102.4%)

(65)

－%

1,867

(84.2%)

2,502

34.0%

1,654

(92.1%)

2,437

47.4%

First half ofthe year
Second halfof the year
Full year

Sales(JPY1M)First half ofthe year
Second halfof the year
Full year

GOP(JPY1M)

Comparison withprevious period

Result34.0%

Full year
First half ofthe year
Second halfof the year

Fiscal year ended December 31, 2021

First half ofthe year
Second halfof the year
Full year<Reference Information 2> Dividend per unit and appropriation for dividends
Dividend per unit for the fiscal year ended December 31, 2020, and the fiscal year ended December 31, 2021, are calculated basedon the following assumptions.

Unappropriated retained earnings

Fiscal year ended
December 31, 2020
(JPY1M)

Fiscal year ended
December 31, 2021
(JPY1M)

1,527

1,300

Total of reserve for temporary difference adjustment(negative goodwill) used

305

335

50-year amortization amount of negative goodwill

262

262

Loss on retirement of noncurrent assets

5

16

Amortization of trademark rights

37

56

1,829

1,634

4,462,347 units

4,467,006 units

¥410

¥366

Total dividends
Total number of investment units issued and outstanding
Dividend per unit

- 15 -

(2) Material events related to going concern assumption
In the fiscal year under review, JHR saw deterioration in its earnings because of the decrease in variable rents linked to hotel
performance, etc. due to the impact of state-of-emergency declarations, stricter measure to prevent the spread of the virus, etc.
implemented in line with the spread of infection by COVID-19. As a result, continuing from the previous fiscal year, the debtservice coverage ratio, which is designated in the loan-related contracts with the financial institutions with which JHR conducts
business, fell below the predetermined reference value. Because such financial situation caused temporary breach of financial
covenants, there is a condition where substantial doubts on going concern may arise. However, JHR has agreed with the financial
institutions with which it conducts business that such financial situation is not considered a breach of the financial covenants. In
the case where the debt-service coverage ratio is lower than the predetermined reference value in the midterm period of the next
fiscal year and thereafter, JHR may breach the financial covenants. Still, JHR believes that there is no material uncertainty
regarding the going concern assumption due to consideration of the good relationships between JHR and the financial institutions
with which it conducts business, continuing support from sponsor related entities, sufficient amount of cash it has on hand,conservative debt ratio, etc.

- 16 -

2. Financial statements(1) Balance sheets
As of
December 31, 2020
AssetsCurrent assets
Cash and deposits
Cash and deposits in trust
Operating accounts receivable
Prepaid expenses
Income taxes receivable
Other
Total current assets
Noncurrent assets
Property and equipment, at cost
Machinery and equipment
Accumulated depreciation
Machinery and equipment, net
Tools, furniture and fixtures
Accumulated depreciation
Tools, furniture and fixtures, net
Construction in progress
Buildings in trust
Accumulated depreciation
Buildings in trust, net
Structures in trust
Accumulated depreciation
Structures in trust, net
Machinery and equipment in trust
Accumulated depreciation
Machinery and equipment in trust, net
Tools, furniture and fixtures in trust
Accumulated depreciation
Tools, furniture and fixtures in trust, net
Land in trust
Construction in progress in trust
Net property and equipment
Intangible assets
SoftwareTrademark rightLeasehold rights in trust
Fixed-term leasehold rights in trust
Other
Total intangible assets
Investments and other assets
Security deposits
Leasehold and security deposits in trust
Long-term prepaid expenses
Derivative assets
Reserve for repairs and maintenanceTotal investments and other assets
Total noncurrent assets
Deferred assets
Investment unit issuance costs
Investment corporation bond issuance costs
Total deferred assets
Total assets*1- 17 -(thousands of yen)
As ofDecember 31, 2021

19,382,019
9,171,145
672,415533,15042
82,69829,841,471

22,838,609
7,458,225
1,750,164
485,240
40
108,41132,640,693

622,365(252,877)
369,487
4,373,456(2,739,679)
1,633,776
2,761
137,193,115(25,172,139)
112,020,975
2,772,035(511,004)
2,261,030
683,995(183,954)
500,040
133,628(112,061)
21,566
216,410,533
83,507
333,303,679

677,977(311,345)
366,632
4,889,299(3,204,701)
1,684,597
21,972137,035,704(28,062,086)
108,973,617
2,844,532(585,251)
2,259,280
645,033(198,085)
446,947
126,678(109,785)
16,893
212,263,515
110,371
326,143,828*1

162,441
523,498
28,532,362
4,765,994
7,076
33,991,374

275,488
467,409
27,324,752
4,630,789
5,920
32,704,360

12,520150,223
2,449,539－
314,067
2,926,350
370,221,403

12,520139,668
2,191,650
12,117
327,476
2,683,432
361,531,621

56,111
177,418
233,529400,296,404

7,735
143,863
151,598
394,323,913

(thousands of yen)
As ofDecember 31, 2020
Liabilities
Current liabilities
Operating accounts payable
Short-term loans payable
Current portion of investment corporation bonds
payableCurrent portion of long-term loans payable
Accrued expenses
Income taxes payable
Consumption taxes payable
Advances received
Dividends payable
Deposits received
Derivative liabilities
Other
Total current liabilities
Long-term liabilities
Investment corporation bonds
Long-term loans payable
Tenant leasehold and security deposits
Tenant leasehold and security deposits in trust
Derivative liabilities
Deferred tax liabilities
Asset retirement obligations
Total long-term liabilities
Total liabilities
Net assets
Unitholders’ equity
Unitholders’ capital
SurplusCapital surplus
Voluntary reserve
Reserve for temporary difference
adjustment
Reserve for tax purpose reduction entry
Total voluntary reserve
Unappropriated retained earnings(undisposed loss)
Total surplus
Total unitholders’ equity
Valuation and translation adjustments
Deferred gains (losses) on hedges
Total valuation and translation adjustments
Total net assets
Total liabilities and net assets*2- 18 -

As ofDecember 31, 2021

2,654,679
12,782,000

1,426,861
24,002,000

1,500,000

6,000,000

10,800,000
527,572
1,210
143,389
423,355
17,381
9,111
21,39842,76328,922,861

8,434,000
538,359
1,210
172,743658,839
9,714
6,002
5,289
10,281
41,265,303

40,100,000
103,572,000
1,040,520
4,356,804
767,749－
335,161
150,172,234
179,095,095

34,100,000
92,218,000
1,040,520
3,614,474
202,673
3,812
336,783
131,516,263
172,781,567

186,894,169

187,194,209

21,746,398

21,746,398

10,617,580*2

10,311,886

1,174,860
11,792,441

1,174,860
11,486,747

1,527,790

1,300,724

35,066,630
221,960,800

34,533,870
221,728,079(759,492)(759,492)*3 221,201,308
400,296,404(185,733)(185,733)*3 221,542,346
394,323,913

(2) Statements of income(thousands of yen)
For the year ended
December 31, 2020
Operating revenue
Real estate operating revenue
Other real estate operating revenue
Gain on sales of real estate properties
Gain on exchange of real estate properties
Total operating revenue
Operating Expenses
Real estate operating costs
Asset management fee
Asset custody and administrative service fee
Directors’ compensation
Other operating expenses
Total operating expenses
Operating income
Non-operating income
Interest income
Gain on forfeiture of unclaimed dividends
Gain on insurance claims
Refunded fixed asset tax
Interest on tax refunds
Gain on derivative instruments
Other
Total non-operating income
Non-operating Expenses
Interest expense
Interest expense on investment corporation bonds
Borrowing costs
Amortization of investment corporation bond issuancecosts
Amortization of investment unit issuance costs
Loss on derivative instruments
Other
Total non-operating expenses
Ordinary profit (loss)
Extraordinary income
Proceeds from refund of guarantee deposits
Total extraordinary income
Income before income taxes
Income taxes – current
Total income taxes
Net income (loss)
Retained earnings brought forward
Unappropriated retained earnings (undisposed loss)

For the year ended
December 31, 2021

9,603,724
892,001*2 3,158,381*3 184,725
13,838,832*1

8,717,332
1,479,381
125,986
17,400322,710
10,662,810
3,176,022

*1

*1

*1

*1

- 19 -

9,502,439
872,223*2 3,258,950－
13,633,613*18,830,354
1,447,210
121,700
17,400257,097
10,673,763
2,959,849

278
3,535
34,217－95
1,138－
39,266267
4,233
34,144
20,527
10,59015,730151
85,646

963,502316,795
399,645907,653
315,762
416,416

33,77633,55484,5204,802
13,9891,817,032
1,398,255

59,0861,000
14,011
1,747,484
1,298,011

130,000
130,000
1,528,255
1,210
1,210
1,527,045
744
1,527,790－－
1,298,011
1,210
1,210
1,296,801
3,922
1,300,724

(3) Statements of changes in net assets
For the year ended December 31, 2020
(thousands of yen)
Unitholders’ equity
Surplus
Voluntary reserve
Total
voluntary
reserve

Unappropriat
ed retained
earnings(undisposed
loss)

Total surplus

12,968,932

15,290,314

50,005,645(1,176,490)

1,176,490－

1,174,860(1,174,860)－(1,174,860)

1,174,860－

Dividends paid

(16,466,060)(16,466,060)

Net income (loss)

1,527,045

1,527,045

Unitholders’capitalBalance, January 1,
2020
Changes of items during
the year:
Reversal of reserve
for temporary
difference adjustment
Provision of reserve
for tax purpose
reduction entry
Reversal of reserve
for special accountfor tax purpose
reduction entry

Net changes of items
other thanunitholders’ equity
Total changes of
items during the year
Balance, December 31,
2020

186,894,169

CapitalsurplusReserve fortemporarydifference
adjustment

21,746,398

11,794,071

Reserve forReserve for tax
special accountpurposefor tax purpose
reduction entry
reduction entry－(1,176,490)
1,174,860(1,174,860)

*1

－

－

(1,176,490)

1,174,860(1,174,860)(1,176,490)(13,762,523)(14,939,014)

186,894,169

21,746,398

10,617,580

1,174,860－

11,792,441

1,527,790

35,066,630

Unitholders’equityValuation and translation
adjustments
Total
Total net assets
Deferred gains
Total unitholders’valuation and(losses) on
equitytranslation
hedgesadjustments
Balance, January 1,
2020
Changes of items during
the year:
Reversal of reserve
for temporary
difference adjustment
Provision of reserve
for tax purpose
reduction entry
Reversal of reserve
for special accountfor tax purpose
reduction entry

236,899,815(377,376)(377,376)

236,522,438

－

－

－

－

－

－

Dividends paid

(16,466,060)(16,466,060)

Net income (loss)

1,527,045

1,527,045

Net changes of items
other thanunitholders’ equity
Total changes of
items during the year
Balance, December 31,
2020

1,174,860(382,115)(382,115)(382,115)(14,939,014)(382,115)(382,115)(15,321,130)

221,960,800(759,492)(759,492)

221,201,308- 20 -

For the year ended December 31, 2021
(thousands of yen)
Unitholders’ equity
Surplus
Unitholders’capitalBalance, January 1,
2021
Changes of items during
the year:Issuance of new
investment unit
Reversal of reserve
for temporary
difference adjustment

186,894,169

Total
voluntary
reserve

Unappropriat
ed retained
earnings(undisposed
loss)

Total surplus

Totalunitholders’equity11,792,441

1,527,790

35,066,630

221,960,800

Voluntary reserve
CapitalsurplusReserve fortemporarydifference
adjustment

Reserve for tax
purposereduction entry

21,746,398

10,617,580

1,174,860

300,039300,039
305,694－－

Dividends paid

(1,829,562)(1,829,562)(1,829,562)

Net income (loss)

1,296,801

1,296,801

1,296,801

Net changes of items
other thanunitholders’ equity
Total changes of
items during the year
Balance, December 31,
2021(305,694)*1(305,694)

300,039－(305,694)－(305,694)(227,066)(532,760)(232,720)

187,194,209

21,746,398

10,311,886

1,174,860

11,486,747

1,300,724

34,533,870

221,728,079

Valuation and translation
adjustments
Total
Total net assets
Deferred gains
valuation(losses) onandhedgestranslation
adjustments
Balance, January 1,
2021
Changes of items during
the year:Issuance of new
investment unit
Reversal of reserve
for temporary
difference adjustment(759,492)(759,492)

221,201,308

300,039－

Dividends paid

(1,829,562)

Net income (loss)

1,296,801

Net changes of items
other thanunitholders’ equity
Total changes of
items during the year
Balance, December 31,
2021

573,758

573,758

573,758

573,758

573,758

341,037(185,733)(185,733)

221,542,346- 21 -

(4) Statements of cash dividends
Classification
I. Unappropriated retained earnings
II. Reversal of voluntary reserve
Reversal of reserve for temporary
difference adjustment
III. Dividends[Dividend per unit]

For the year ended
December 31, 2020
¥1,527,790,689*1¥305,694,382¥1,300,724,473*1¥335,371,387¥1,829,562,270[¥410]¥1,634,924,196[¥366]¥3,922,801¥1,171,664

IV. Retained earnings carried forward
Method of calculating the amount ofdividends

For the year ended
December 31, 2021

In accordance with the monetary
distribution policy stipulated in Article 34,
paragraph 1 of JHR’s Articles ofIncorporation, amount of dividend must
exceed 90% of JHR’s distributable profit
that is defined by Article 67-15 of the Act
on Special Measures Concerning
Taxation. It was decided that
¥1,829,562,270, which excludes fractionsof less than one yen of dividend per unit
from ¥1,833,485,071, an amountcalculated by adding a reversal of reserve
for temporary difference adjustment of¥305,694,382 to unappropriated retained
earnings of ¥1,527,790,689, would all be
distributed. The monetary distribution inexcess of earnings stipulated in Article 34,
paragraph 1 (4) of JHR’s Articles ofIncorporation will not be made.

- 22 -In accordance with the monetary
distribution policy stipulated in Article 34,
paragraph 1 of JHR’s Articles ofIncorporation, amount of dividend must
exceed 90% of JHR’s distributable profit
that is defined by Article 67-15 of the Act
on Special Measures Concerning
Taxation. It was decided that
¥1,634,924,196, which excludes fractionsof less than one yen of dividend per unit
from ¥1,636,095,860, an amountcalculated by adding a reversal of reserve
for temporary difference adjustment of¥335,371,387 to unappropriated retained
earnings of ¥1,300,724,473, would all be
distributed. The monetary distribution inexcess of earnings stipulated in Article 34,
paragraph 1 (4) of JHR’s Articles ofIncorporation will not be made.

(5) Statements of cash flows(thousands of yen)
For the year ended
December 31, 2020
Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Gain on exchange of real estate properties
Loss on retirement of noncurrent assets
Loss (profit) on derivative instruments
Amortization of investment corporation bond issuancecosts
Amortization of investment unit issuance costs
Decrease in property and equipment due to sale
Decrease in property and equipment in trust due to sale
Decrease in intangible assets due to sale
Proceeds from refund of guarantee deposits
Interest income
Interest expense
Interest on tax refunds(Increase) decrease in operating accounts receivable(Increase) decrease in prepaid expenses(Increase) decrease in long-term prepaid expenses
Increase (decrease) in operating accounts payable
Increase (decrease) in accrued expenses
Increase (decrease) in consumption taxes payable
Increase (decrease) in advances received
Increase (decrease) in deposits received
Other
SubtotalInterest received
Interest paid
Interest received on tax refunds
Income taxes - refunded (paid)
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of property and equipment
Purchase of property and equipment in trust
Purchase of intangible assets
Payments of reserve for repairs and maintenance
Proceeds from collection of guarantee deposits
Proceeds from collection of guarantee deposits in trust
Proceeds from tenant leasehold and security deposits
in trust
Reimbursements of tenant leasehold and security
deposits in trust
Payments into deposit with withdrawal restrictions
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from short-term loans payable
Repayments of short-term loans payable
Repayments of long-term loans payable
Redemption of investment corporation bonds
Proceeds from issuance of investment units
Dividends paid
Net cash provided by (used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

- 23 -For the year ended
December 31, 2021

1,528,255
4,761,907(184,725)
5,701
3,663

1,298,011
4,804,111－
16,682(14,730)

33,77633,55484,5201,010
4,789,585－(130,000)(278)
1,280,297(95)
2,107,315
17,130316,935
1,693,683(124,063)(517,659)(485,938)
414(153,173)
15,028,266
312(1,280,097)
95(1,197)
13,747,378

59,086
48,841
7,757,292
2,918
－
(267)
1,223,415(10,590)(1,077,749)
47,910257,888(1,694,120)
12,47529,354
235,483(3,108)(128,639)
12,897,821
271(1,225,104)
10,590(1,208)
11,682,370(476,704)(1,858,016)(604,760)(36,549)
130,000－(666,633)(2,828,665)(199,936)(40,625)－
10,55564,941

56,530(296,047)(726,247)－(3,077,137)(300,000)(4,695,022)

18,574,000(5,792,000)(12,782,000)－－(16,461,008)(16,461,008)(5,790,766)
34,343,930*1 28,553,164

25,082,000(13,862,000)(13,720,000)(1,500,000)
289,329(1,833,006)(5,543,676)
1,443,670
28,553,164*1 29,996,835

(6) Notes on going concern assumption
Not applicable.

(7) Notes on matters concerning significant accounting policies
1.

Method ofdepreciation andamortization of
noncurrent assets

2.

Accounting fordeferred assets

3.

Standards forrecognition ofrevenues andexpenses

4.

Method of hedge
accounting

5.

Scope of funds(cash and cash
equivalents) in thestatements of cash
flows

6.

Other significant
matters serving as
the basis for
preparing financial
statements(1) Property and equipment (including trust accounts)
Property and equipment are amortized using the straight-line method. The useful lives of major
property and equipment components are as follows:
Machinery and equipment
2 to 17 years
Tools, furniture and fixtures
2 to 26 years
Buildings in trust
2 to 64 years
Structures in trust
2 to 64 years
Machinery and equipment in trust
3 to 32 years
Tools, furniture and fixtures in trust
2 to 27 years(2) Intangible assets
Intangible assets are amortized using the straight-line method. The amortization period of major
intangible assets is as follows.
Software (for internal use)
5 years as internally usable years
Trademark right
10 years
Fixed-term leasehold rights in trust is amortized using the straight-line method based on remaining
period (41 years) of the contract.
(3) Long-term prepaid expenses
Long-term prepaid expenses are amortized using the straight-line method.
(1) Investment unit issuance costs
Investment unit issuance costs are amortized using the straight-line method over three years.
(2) Investment corporation bond issuance costs
Investment corporation bond issuance costs are amortized using the interest method over therespective term of the bond.
Treatment of property taxes and other taxes
For taxes imposed on properties under management such as property taxes, city planning taxes, anddepreciable asset taxes, the imposed amounts are allocated to the respective period and expensed as“Real estate operating costs.”
Cash paid for property taxes and city planning taxes, etc. to the transferor of real properties, etc. atacquisition is not recorded as “Real estate operating costs” but capitalized as part of the acquisition costof the relevant property.
The amount of such taxes capitalized in the acquisition cost of real properties, etc. was none for the year
ended December 31, 2020, and for the year ended December 31, 2021.
(1) Method of hedge accounting
Deferred hedge accounting is applied(2) Hedging instruments and hedged items
Hedging instruments
Interest rate swaps
Hedged items
Interest rates on loans payable(3) Hedging policy
JHR enters into certain derivative transactions in accordance with its financial policy in order tomanage risks, which is provided in the Articles of Incorporation.
(4) Method for assessing hedge effectiveness
JHR evaluates hedge effectiveness by comparing the cumulative changes in cash flow of hedging
instruments and the hedged items and assessing the ratio between the changes.
Cash and cash equivalents in the statements of cash flows consist of cash on hand, cash in trust accounts,
bank deposit and trust deposit, which can be withdrawn at any time, and short-term investments with amaturity of three months or less when purchased, which can easily be converted to cash and subject tominimal risk of change in value.
(1) Accounting treatment of beneficial interests in trust with real estate, etc. as their assets
For trust beneficial interests in real estate, etc., all assets and liabilities held in trust accounts as well
as all income generated and expenses incurred from assets in trust are presented in the accompanying
balance sheet and income statement accounts accordingly.
The following material items of the trust accounts recorded in the relevant accounts are presented
separately on the balance sheets.
(a) Cash and deposits in trust(b) Buildings in trust; Structures in trust; Machinery and equipment in trust; Tools, furniture andfixtures in trust; Land in trust; Construction in progress in trust(c) Leasehold rights in trust; Fixed-term leasehold rights in trust; Leasehold and security deposits
in trust(d) Tenant leasehold and security deposits in trust(2) Accounting treatment of consumption taxes
Consumption taxes are excluded from the transaction amounts.
- 24 -

(8) Notes on change in the indication method“Notes on significant accounting estimates” is provided because “Accounting Standard for Disclosure of Accounting Estimates”(Accounting Standards Board of Japan (“ASBJ”) Statement No. 31, March 31, 2020) has been applied from the fiscal year underreview. However, in accordance with the transitional treatment as stipulated in the proviso of Paragraph 11 of the AccountingStandard, there is no information provided for the previous fiscal year.

(9) Notes on significant accounting estimates[Notes on significant accounting estimates]
Valuation of noncurrent assets
1. Amounts recorded in the financial statements for the year ended December 31, 2021
Property and equipment, at cost
¥326,143,828,000¥32,704,360,000
Intangible assets
Impairment loss
¥2. Information on the nature of significant accounting estimates for identified items
In accordance with the accounting standard for impairment of noncurrent assets, JHR has adopted the accounting treatment to
reduce the book value of noncurrent assets to a recoverable amount when the invested amount is deemed to be unrecoverable
due to decline in profitability.
In adopting the accounting treatment, the respective properties owned by JHR are regarded as a single asset group, andjudgment is made whether it is required to recognize impairment losses when indications of impairment are deemed to exist
for the group due to a significant decline in the market value and such.
Future cash flow estimates are used to determine whether or not to recognize impairment losses. When it is determined that
impairment losses should be recognized, the book value is reduced to the recoverable amount, and the reduced amount isrecorded as impairment losses.
In estimating the future cash flow, the underlying rent, occupancy rate and real estate operating costs, etc. are calculated bycomprehensively taking into account the market trends and transaction cases of similar properties, etc.
JHR’s asset management business in real estate have seen risks of its operating revenue decreasing, etc. due to requests for
reduction or postponement of fixed rent arising from some of the lessees whose business performance has worsened, a decreasein variable rents linked to hotel sales and other factors brought about by the worldwide spread of the infection by COVID-19
and the deterioration in social and economic conditions.
Although it is uncertain and difficult to foresee when the spread of the infection by COVID-19 will be contained, JHR madeaccounting estimates by applying impairment accounting for noncurrent assets based on information available as of the dateof preparation of this Financial Report and assuming that the impact by COVID-19 will continue through the fiscal year ending
December 31, 2022, followed by recovery in performance after a certain period of time.
However, as it is difficult to accurately predict when the spread of the infection by COVID-19 will be contained and how large
its impact will be, JHR may see its asset status, income and cash flows affected in case the recovery is delayed.

- 25 -

(10) Notes to financial statements
Disclosure of notes on “securities,” “share of (profit) loss of entities accounted for using equity method,” “related-party
transactions” and “retirement benefits” is omitted because the significance of disclosure in the financial report is minimal.

[Notes to balance sheets]*1. Accumulated advanced depreciation of property and equipment deducted from acquisition costs due to government subsidies
received, etc.
(thousands of yen)
As of
As of
December 31, 2020
December 31, 2021
Buildings in trust

24,921

24,921*2. Matters concerning provision and reversal of reserve for temporary difference adjustment
As of December 31, 2020
(thousands of yen)

Dividend
reserve(Note)

Amount ofinitialaccrualBalance at
beginning of
periodAmount ofprovision
during period

Amount ofreversalduringperiod13,127,153

11,794,071-

1,176,490

Balance at
end ofperiodGrounds for provision and reversal

10,617,580

Allocation for dividend(Note) Dividend reserve indicates the remaining balance of the amount subdivided into gain on negative goodwill, which wasrecorded as a dividend reserve before the fiscal year ended December 2016, and is scheduled for reversal every fiscal
year starting from the fiscal year following the fiscal year in which the reserve was made in an amount that shall be noless than that in equal amounts every fiscal year over a period of no more than 50 years.
As of December 31, 2021
(thousands of yen)

Dividend
reserve(Note)

Amount ofinitialaccrualBalance at
beginning of
periodAmount ofprovision
during period

Amount ofreversalduringperiod13,127,153

10,617,580-

305,694

Balance at
end ofperiodGrounds for provision and reversal

10,311,886

Allocation for dividend(Note) Dividend reserve indicates the remaining balance of the amount subdivided into gain on negative goodwill, which wasrecorded as a dividend reserve before the fiscal year ended December 2016, and is scheduled for reversal every fiscal
year starting from the fiscal year following the fiscal year in which the reserve was made in an amount that shall be noless than that in equal amounts every fiscal year over a period of no more than 50 years.
*3. Minimum net assets as required by Article 67, Paragraph 4 of the Investment Trusts Act
As of
As of
December 31, 2020
December 31, 2021
¥50,000 thousand- 26 -¥50,000 thousand

[Notes to statements of income]*1. Components of real estate operating revenue and real estate operating costs(thousands of yen)
For the year ended
December 31, 2020
A. Real estate operating revenue
Real estate operating revenue
Fixed rent
Variable rent
Income from management contracts
Total
Other real estate operating revenue
Parking lots
Other incidental revenue
Utilities
Other
Total
Total real estate operating revenue
B. Real estate operating costs
Real estate operating costs
Land lease and other rent expenses
Property taxes
Outsourcing expenses (Note)
Nonlife insurance
Depreciation and amortization
Loss on retirement of noncurrent assets
Repairs
Utilities
Trust fees
Other
Total real estate operating costs
C. Net real estate operating income (A-B)

For the year ended
December 31, 2021

7,640,060
1,902,240
61,423
9,603,724

6,413,988
3,054,524
33,926
9,502,439

116,458
83,051
546,450
146,041
892,001
10,495,725

116,270
66,395483,341
206,216
872,223
10,374,662

890,001
1,915,565
423,852
67,271
4,761,907
5,701
29,261
559,044
42,48022,245
8,717,332

857,819
1,947,316
494,005
73,031
4,804,111
16,68230,176498,283
43,55865,3698,830,354

1,778,393

1,544,308(Note) Outsourcing expenses include management fees of ¥70,119 thousand for the year ended December 31, 2020, and ¥148,088 thousand for the year ended
December 31, 2021.

*2. Breakdown of gain on sales of real estate properties
For the year ended December 31, 2020
(thousands of yen)
Sotetsu Fresa Inn Shimbashi-Karasumoriguchi
Proceeds from sale of real estate

8,000,000

Cost of sale of real estate

4,790,596

Other related sales expenses
Gain on sales of real estate
properties

51,021
3,158,381

For the year ended December 31, 2021
(thousands of yen)ibis Tokyo Shinjuku
Proceeds from sale of real estate

11,300,000

Cost of sale of real estate

7,809,052

Other related sales expenses
Gain on sales of real estate
properties

231,996
3,258,950- 27 -

*3. Breakdown of gain on exchange of real estate properties
For the year ended December 31, 2020
(thousands of yen)
HOTEL ASCENT FUKUOKA (Current name: Hotel Oriental Express Fukuoka Tenjin) (part of leasehold land)
Proceeds from transfer of real
523,000
estateCost of transfer of real estate
333,359
Other related transfer expenses
Gain on exchange of real estate
properties

4,915
184,725

For the year ended December 31, 2021
Not applicable.

[Notes to statements of changes in net assets]
For the year ended
December 31, 2020
*1 Total number of investment units
authorized, and issued andoutstanding
Total number of investment units
authorized
Total number of investment units issued
and outstanding

For the year ended
December 31, 2021

20,000,000 units

20,000,000 units

4,462,347 units

4,467,006 units[Notes to statements of cash dividends]*1. Reserve for temporary difference adjustment
For the year ended December 31, 2020
By application of the transitional measures of Paragraph 3 of the Supplementary Provisions of the “Ordinance on Accountingsof Investment Corporations” (Cabinet Office Ordinance No. 27 of 2015), ¥13,127,153,216 in dividend reserve that is theremaining balance of the amount subdivided into gain on negative goodwill recorded in prior fiscal years is set aside as
reserve for temporary difference adjustment on the statements of cash dividends for the year ended December 31, 2016.
Starting from the fiscal year following the fiscal year in which the reserve was made, reversal of the concerned reserveamount in an amount that shall be no less than the 50-year even amortization amount (¥262,543,065) of the remainingbalance of the amount when the reserve was made, is required. In this fiscal year under review, reversal of ¥305,694,382 hasbeen decided, which is the amount calculated by adding ¥5,701,616 equivalent to loss on retirement of noncureent assetsand ¥37,392,766 equivalent to amortization of trademark right to ¥262,600,000 of the reversal.
For the year ended December 31, 2021
By application of the transitional measures of Paragraph 3 of the Supplementary Provisions of the “Ordinance on Accountingsof Investment Corporations” (Cabinet Office Ordinance No. 27 of 2015), ¥13,127,153,216 in dividend reserve that is theremaining balance of the amount subdivided into gain on negative goodwill recorded in prior fiscal years is set aside as
reserve for temporary difference adjustment on the statements of cash dividends for the year ended December 31, 2016.
Starting from the fiscal year following the fiscal year in which the reserve was made, reversal of the concerned reserveamount in an amount that shall be no less than the 50-year even amortization amount (¥262,543,065) of the remainingbalance of the amount when the reserve was made, is required. In this fiscal year under review, reversal of ¥335,371,387 has
been decided, which is the amount calculated by adding ¥16,682,237 equivalent to loss on retirement of noncurrent assetsand ¥56,089,150 equivalent to amortization of trademark right to ¥262,600,000 of the reversal.

- 28 -

[Notes to statements of cash flows]*1. Relation of balance of cash and cash equivalents at end of year and the amount in balance sheet accounts(thousands of yen)
For the year ended
December 31, 2020

For the year ended
December 31, 2021

Cash and deposits

19,382,019

22,838,609

Cash and deposits in trust

9,171,145

7,458,225－(300,000)

28,553,164

29,996,835

Deposit with withdrawal restrictions
Cash and cash equivalents[Notes on lease transactions]Operating leases (as lessor)
Minimum rental revenue under non-cancellable operating leases(thousands of yen)
As ofDecember 31, 2020

As ofDecember 31, 2021

Due within one year

990,152

1,293,157

Due after one year

1,213,075

4,979,488

Total

2,203,227

6,272,645[Notes on financial instruments]
1. Matters concerning status of financial instruments(1) Policy for financial instruments
JHR is an investment corporation set forth in Article 2, paragraph 12 of the Investment Trusts Act, managing investments
mainly in specified assets as prescribed in the Investment Trusts Act. As a policy, JHR procures funds through issuance ofinvestment units, etc. and loans from financial institutions in order to make investments in specified assets. JHR does not
utilize surplus funds to invest in financial instruments except for short-term deposits and other equivalent short-term
financial instruments. JHR may enter into derivative transactions in order to hedge against interest rate risk, but not for
speculative trading purposes.
(2) Details of financial instruments, their risks, and risk management system
Operating accounts receivable is operating receivables and is exposed to credit risks of clients. As for the risks, JHR is
managing payment dates and balances by each client with an aim to grasp concerns in collecting due to deterioration in theirfinancial status and other factors in early stage and reduce the risks.
The floating rate loans payable are exposed to risks of interest rate fluctuations. In order to mitigate interest rate risk, JHR
may enter into derivative transactions, if necessary, to fix the interest expense.
Derivative transactions are conducted principally in accordance with rules prescribed by JHR and risk management rules
applied by the Asset Management Company. Derivative transactions are arranged by the section in charge of finance at theAsset Management Company by using financial institutions with high credit ratings through approval and resolution byauthorized personnel and a meeting committee structure set forth in its decision-making standards and resolution of JHR’sboard of directors.
Loans payable are exposed to liquidity risks. The section in charge of finance at the Asset Management Company preparesand updates projections and actual cash flows on a monthly basis to manage liquidity risks and monitor compliance withrestrictive covenants set forth in the loan agreements. JHR manages liquidity risks by managing the ratio of short-term andlong-term loans payable considering the current financial environment through approval and resolution by authorized
personnel and meeting committee structure in the Asset Management Company and resolution of JHR’s board of directors.
(3) Supplementary explanation on matters concerning fair value, etc. of financial instruments
Regarding the contract amount, etc. of derivative transactions in “2. Matters concerning fair value of financial instruments,”
the amount itself does not indicate certain scale of market risk exposure related to derivative transactions.

- 29 -

2. Matters concerning fair value of financial instruments
Carrying amounts of financial instruments on the balance sheets, their fair values, and the differences as of December 31,
2020, were as follows. Financial instruments whose fair values are considered extremely difficult to measure are not includedin the table. See Note 2 below.
Carrying amount(JPY 1,000)

Fair value(JPY 1,000)

Difference(JPY 1,000)(1) Cash and deposits

19,382,019

19,382,019-(2) Cash and deposits in trust

9,171,145

9,171,145-

672,415

672,415-

Total assets

29,225,579

29,225,579-(4) Short-term loans payable(5) Current portion of investment
corporation bonds payable(6) Current portion of long-term loans
payable(7) Investment corporation bonds

12,782,000

12,782,000-

1,500,000

1,468,350(31,650)

10,800,000

10,800,000-

40,100,000

34,415,280(5,684,720)(8) Long-term loans payable

103,572,000

103,572,000-

Total liabilities

168,754,000

163,037,630(5,716,370)(789,147)(789,147)-(3) Operating accounts receivable(9) Derivative transactions (*)

Carrying amounts of financial instruments on the balance sheets, their fair values, and the differences as of December 31,
2021, were as follows. Financial instruments whose fair values are considered extremely difficult to measure are not includedin the table. See Note 2 below.
Carrying amount
Fair value
Difference(JPY 1,000)(JPY 1,000)(JPY 1,000)(1) Cash and deposits

22,838,609

22,838,609-(2) Cash and deposits in trust

7,458,225

7,458,225-(3) Operating accounts receivable

1,750,164

1,750,164-

Total assets

32,046,999

32,046,999-(4) Short-term loans payable(5) Current portion of investment
corporation bonds payable(6) Current portion of long-term loans
payable(7) Investment corporation bonds

24,002,000

24,002,000-

6,000,000

5,886,600(113,400)

8,434,000

8,434,000-

34,100,000

29,514,460(4,585,540)(8) Long-term loans payable

92,218,000

92,218,000-

Total liabilities

164,754,000

160,055,060(4,698,940)(195,846)(195,846)-(9) Derivative transactions (*)(*)

Receivables and payables arising from derivative transactions are presented on a net basis and amounts in parenthesis denote net
payables.

(Note 1) Methods to measure fair value of financial instruments, and derivative transactions(1) Cash and deposits; (2) Cash and deposits in trust; (3) Operating accounts receivable; (4) Short-term loans payable
The carrying value is deemed to approximate the fair value since the instruments are scheduled to be settled in a short periodof time. Therefore, carrying value is stated.
(5) Current portion of investment corporation bonds payable; (7) Investment corporation bonds
The fair value of these instruments is measured based on the market price.
(6) Current portion of long-term loans payable; (8) Long-term loans payable
The carrying value is deemed to approximate the fair value since the interest rate on long-term loans payable are floatinginterest rates which are revised periodically to reflect market interest rates.
(9) Derivative transactions
The information on the fair value of derivative transactions is presented in “Notes on derivative transactions” below.

- 30 -

(Note 2) Carrying amount of financial instruments whose fair values are considered extremely difficult to measure(thousands of yen)
As ofDecember 31, 2021

As ofDecember 31, 2020

Classification
Tenant leasehold and security deposits
Tenant leasehold and security deposits
in trust
Total

1,040,520

1,040,520

4,356,804

3,614,474

5,397,324

4,654,994

Tenant leasehold and security deposits / Tenant leasehold and security deposits in trust
Tenant leasehold and security deposits (in trust) are not subject to fair value disclosure because they have no market price andtheir actual deposit periods from a tenant’s move-in to move-out are not estimable, thus making a reasonable estimate of future
cash flows is difficult.
3. Redemption schedule for monetary claims subsequent to the account closing date
As of December 31, 2020
Due within one Due after one Due after two Due after three Due after four Due after fiveyear
to two years to three years to four years to five years
years(JPY 1,000)(JPY 1,000)(JPY 1,000)(JPY 1,000)(JPY 1,000)(JPY 1,000)
Cash and deposits

19,382,019

-

-

-

-

-

Cash and deposits in trust

9,171,145

-

-

-

-

-

672,415

-

-

-

-

-

29,225,579

-

-

-

-

-

Operating accounts receivable
Total
As of December 31, 2021

Due within one Due after one Due after two Due after three Due after four Due after fiveyear
to two years to three years to four years to five years
years(JPY 1,000)(JPY 1,000)(JPY 1,000)(JPY 1,000)(JPY 1,000)(JPY 1,000)
Cash and deposits

22,838,609

-

-

-

-

-

Cash and deposits in trust

7,458,225

-

-

-

-

-

Operating accounts receivable

1,750,164

-

-

-

-

-

Total

32,046,999

-

-

-

-

-

4. Schedule for repayment of loans payable and redemption of investment corporation bonds subsequent to the account closing
date
As of December 31, 2020
Due within one Due after one Due after two Due after three Due after four Due after fiveyear
to two years to three years to four years to five years
years(JPY 1,000)(JPY 1,000)(JPY 1,000)(JPY 1,000)(JPY 1,000)(JPY 1,000)
Short-term loans payable
Current portion of investment
corporation bonds payable
Current portion of long-term loans
payableInvestment corporation bonds
Long-term loans payable
Total

12,782,000

-

-

-

-

-

1,500,000

-

-

-

-

-

10,800,000

-

-

-

-

-

-

6,000,000-

3,000,000-

31,100,000-

10,900,000

15,772,000

18,650,000

19,000,000

39,250,000

25,082,000

16,900,000

15,772,000

21,650,000

19,000,000

70,350,000- 31 -

As of December 31, 2021
Due within one Due after one Due after two Due after three Due after four Due after fiveyear
to two years to three years to four years to five years
years(JPY 1,000)(JPY 1,000)(JPY 1,000)(JPY 1,000)(JPY 1,000)(JPY 1,000)
Short-term loans payable
Current portion of investment
corporation bonds payable
Current portion of long-term loans
payableInvestment corporation bonds

24,002,000

-

-

-

-

-

6,000,000

-

-

-

-

-

8,434,000

-

-

-

-

-

-

-

3,000,000-

13,100,000

18,000,000-

15,432,000

18,536,000

19,000,000

4,250,000

35,000,000

38,436,000

15,432,000

21,536,000

19,000,000

17,350,000

53,000,000

Long-term loans payable
Total[Notes on derivative transactions]
1. Derivative transactions to which hedge accounting is not applied
As of December 31, 2020
For derivative transactions which hedge accounting is not applied, the contract amount or the amount equivalent to theprincipal provided in the contract, etc. as of the account closing date was as follows:(thousands of yen)Classification

Type, etc. of derivativetransaction

Transactions
other thanmarkettransactions

Interest rate swaps(fixed rate payment,
floating rate receipt)

Contract amount, etc.
Of which, due
after one year
3,494,000

3,494,000

Fair value

Method to measure the fair value

The fair value is measured at the(29,655) quoted price, etc. obtained from thecounterparty financial institutions.

As of December 31, 2021
For derivative transactions which hedge accounting is not applied, the contract amount or the amount equivalent to theprincipal provided in the contract, etc. as of the account closing date was as follows:(thousands of yen)Classification

Type, etc. of derivativetransaction

Transactions
other thanmarkettransactions

Interest rate swaps(fixed rate payment,
floating rate receipt)

Contract amount, etc.
Of which, due
after one year
3,494,000

3,494,000

Fair value

Method to measure the fair value

The fair value is measured at the(13,924) quoted price, etc. obtained from thecounterparty financial institutions.

2. Derivative transactions to which hedge accounting is applied
As of December 31, 2020
For derivative transactions which hedge accounting is applied, the contract amount or the amount equivalent to the principal
provided in the contract, etc. as of the account closing date for each method of hedge accounting was as follows:(thousands of yen)
Method ofhedge
accounting

Type, etc. of derivative Main hedgedtransaction
item

DeferralmethodInterest rate
swaps(fixed rateLong-term
payment, floating rate loans payable
receipt)

Contract amount, etc.
Of which, due
after one year
101,072,000- 32 -

90,272,000

Fair value

Method to measure thefair value

The fair value ismeasured at the quoted(759,492) price, etc. obtained
from the counterparty
financial institutions.

As of December 31, 2021
For derivative transactions which hedge accounting is applied, the contract amount or the amount equivalent to the principal
provided in the contract, etc. as of the account closing date for each method of hedge accounting was as follows:(thousands of yen)
Method ofhedge
accounting

Type, etc. of derivative Main hedgedtransaction
item

DeferralmethodInterest rate swaps(fixed rate payment,
floating rate receipt)

Long-termloans payable

Contract amount, etc.
Fair value

Of which, due
after one year
89,660,000

Method to measure thefair value

The fair value ismeasured at the quoted(181,921) price, etc. obtained
from the counterparty
financial institutions.

78,460,000[Notes on tax-effect accounting]1.

Components of deferred tax assets and liabilities by cause(thousands of yen)
As ofDecember 31, 2021

As ofDecember 31, 2020
Deferred tax assets:
Valuation difference on assets accepted through merger

1,696,476

1,681,502

Amortization of fixed-term leasehold of land

206,151

248,687

Asset retirement obligations

15,53019,131

Amortization of trademark right

11,76329,409Deferred gains (losses) on hedges

238,937

61,045

Total gross deferred tax assets

2,168,860

2,039,776

Valuation allowance(2,168,860)(2,039,776)--

Deferred gains (losses) on hedges

-

3,812

Total gross deferred tax liabilities

-

3,812

Total deferred tax assets
Deferred tax liabilities

2.

Details of major causes of material differences between the statutory tax rate and the tax rate under effective tax accounting
As of
As of
December 31, 2020
December 31, 2021
Statutory tax rate
31.46%
31.46%[Adjustments]
Deduction for dividends paid

(34.09%)(35.22%)

Change in valuation allowance

2.63%

3.76%

Other

0.08%

0.09%

Actual effective tax rate

0.08%

0.09%

- 33 -

[Notes on asset retirement obligations]
Asset retirement obligations recognized on the balance sheet
1. Outline of the subject asset retirement obligations
JHR recognizes asset retirement obligations as it is obliged to restore the land of Oriental Hotel Fukuoka Hakata Station(former name: Hotel Centraza Hakata), acquired on April 1, 2016, and Hotel Oriental Express Fukuoka Tenjin (formerly
HOTEL ASCENT FUKUOKA), acquired on August 19, 2016, to the original state in accordance with the fixed-termleasehold agreement. For the asset retirement obligations of Hotel Oriental Express Fukuoka Tenjin, the obligations havebeen expired as of the end of the fiscal year ended December 31, 2020, with the termination of the fixed-term leasehold
agreement on its land due to the exchange of part of the land as of October 29, 2020.
2. Calculation method of the subject asset retirement obligations
Calculated the amount of asset retirement obligations by estimating the expected useful period of use of 34 years and 48
years based on the remaining useful lives of the period of buildings and using the discount rate of 0.484% and 0.394%,
respectively.
3. Increase and decrease of the subject asset retirement obligations(thousands of yen)
For the year ended
For the year ended
December 31, 2020
December 31, 2021
Balance at beginning of period
Adjustment due to passage of time
Decrease due to expiration of asset
retirement obligations
Balance at end of period

447,677

335,161

1,989

1,622

(114,505)-

335,161

336,783[Notes on segment and related information]
1. Segment information
The segment information has been omitted because JHR has only one segment, which is the investment and management ofhotel real estate.
2. Related information
For the year ended December 31, 2020
(1) Information about products and services
Information about products and services has been omitted because operating revenue from external customers in a single
product / service category accounted for more than 90% of total operating revenue on the statements of income.
(2) Information about geographical areas(i) Operating revenue
Information about geographical areas has been omitted because operating revenue from external customers in Japanaccounted for more than 90% of total operating revenue on the statements of income.
(ii) Property and equipment, at cost
Information about property and equipment has been omitted because the amount of property and equipment located inJapan accounted for more than 90% of net property and equipment on the balance sheets.
(3) Information about major customers(thousands of yen)
Name of customer

Operating revenue

Hotel Management Japan Co., Ltd. (Note 1)

1,990,793

THE DAIICHI BUILDING CO., LTD.

Undisclosed (Note 2)

Name of related segment
Investment and management ofhotel real estate
Investment and management ofhotel real estate(Note 1) Operating revenue includes the operating revenue from customers belonging to the same company group as said customers.
(Note 2) Undisclosed as the consent of the lessee has not been obtained.

- 34 -

For the year ended December 31, 2021
(1) Information about products and services
Information about products and services has been omitted because operating revenue from external customers in a single
product / service category accounted for more than 90% of total operating revenue on the statements of income.
(2) Information about geographical areas(i) Operating revenue
Information about geographical areas has been omitted because operating revenue from external customers in Japanaccounted for more than 90% of total operating revenue on the statements of income.
(ii) Property and equipment, at cost
Information about property and equipment has been omitted because the amount of property and equipment located inJapan accounted for more than 90% of net property and equipment on the balance sheets.
(3) Information about major customers(thousands of yen)
Name of customer

Operating revenue

Hotel Management Japan Co., Ltd. (Note 1)

2,524,020

THE DAIICHI BUILDING CO., LTD.

Undisclosed (Note 2)

Name of related segment
Investment and management ofhotel real estate
Investment and management ofhotel real estate(Note 1) Operating revenue includes the operating revenue from customers belonging to the same company group as said customers.
(Note 2) Undisclosed as the consent of the lessee has not been obtained.

[Notes on rental properties, etc.]
JHR owns rental properties for hotels. The carrying amounts, changes in such balances, and fair values of such properties wereas follows:(thousands of yen)
For the year ended
December 31, 2020

Use

Hotel

Carrying amount
Balance at beginning of
periodNet increase (decrease)during period

374,314,498

367,283,696(7,030,802)(8,463,831)

Balance at end of period

367,283,696

358,819,865

493,330,000

485,480,000

Fair value at end of period(Note 1)

(Note 2)For the year ended
December 31, 2021

Decrease during the year ended December 31, 2020, principally represents the sale of Sotetsu Fresa Inn Shimbashi-Karasumoriguchi for ¥4,790 million
and recording of depreciation. Decrease during the year ended December 31, 2021, principally represents the sale of ibis Tokyo Shinjuku for ¥7,809
million and recording of depreciation.
Fair value at end of period is the appraisal value determined by external licensed real estate appraisers.

Real estate operating revenue and costs related to the rental properties were as follows:(thousands of yen)
For the year ended
December 31, 2020

Use

For the year ended
December 31, 2021

Amount on the statements of income
Hotel(Note)

Real estate operating revenue

10,495,725

10,374,662

Real estate operating costs

8,717,332

8,830,354

Net real estate operating
income1,778,393

1,544,308“Real estate operating revenue” and “Real estate operating costs” are income from real estate operation (including other income from real estate operation)and corresponding expenses (such as depreciation, property tax, etc., trust fees, repair expenses and others), and are included in “Real Estate operating
revenue” and “Real estate operating costs,” respectively.

- 35 -

[Notes on per unit information]
For the year ended
December 31, 2020

For the year ended
December 31, 2021

Net assets per unit

¥49,570¥49,595

Net income per unit

¥342

¥290

(Note 1)

Net income per unit is computed by dividing net income by the average number of investment units during the period.

(Note 2)

Net income per unit after the adjustment of potentially dilutive units is not presented since there are no potentially dilutive units.
The basis of computation of net income per unit is as follows:

For the year ended
December 31, 2020
Net income (JPY 1,000)
Amount not attributable to common
unitholders (JPY 1,000)
Net income attributable to common
investment units (JPY 1,000)
Average number of investment units during
period (units)

For the year ended
December 31, 2021
1,527,045

1,296,801--

1,527,045

1,296,801

4,462,347

4,466,061[Notes on significant subsequent events]
Conclusion of memorandums of understanding related to change fixed-term building lease contracts
On February 25, 2022, board of directors meeting of JHR resolved to conclude memorandums of understanding relating tochange fixed-term building lease contracts in relation with contracts to change fixed-term building lease contracts dated
August 25, 2020 (hereinafter “Previous Contracts for Change”) on 14 properties listed in chart (1) Fixed rent below among
16 properties leased to HMJ Group as tenant in order to change leasing structure for fiscal year 2022. And JHR concluded
the memorandums of understanding on the same date. Although JHR believes that hotel market will gradually recover during
fiscal year 2022 due to progress of vaccination and development of therapeutic medicine in addition to supporting measuresby national and local governments to promote tourism, speed of recovery and downside risks are difficult to make reasonableestimate. Therefore, as we did in Previous Contracts for Change dated August 2020, we decided to exempt annual fixed rent
in total JPY 8,030 million and adopt full variable rent structure. Base amount of AGOP (*1) and payment ratio of variable
rent when AGOP exceed the base amount are unchanged from last change. In addition, rent after 2023 is unchanged fromrent structure for 2022 which structured in Previous Contracts for Change.
Please see below for detail of changes.
(1) Fixed rent
Fixed rent
No

Name

Before change

TenantFrom FY 2022 onwards
1
2
3
4
5

8

Kobe Meriken Park Oriental Hotel
Oriental Hotel tokyo bay
Namba Oriental Hotel
Hotel Nikko Alivila
Oriental Hotel Hiroshima
Oriental Hotel Okinawa
Resort & Spa
ACTIVE-INTER CITYHIROSHIMA(Sheraton Grand Hiroshima Hotel)
Oriental Hotel Fukuoka Hakata
Station9

Holiday Inn Osaka Namba

10

Hilton Tokyo Narita Airport

11

International Garden Hotel Narita

12

Hotel Nikko Nara

13

Hotel Oriental Express Osaka
Shinsaibashi

14

Hilton Tokyo Odaiba

6
7

After change
From FY 2023
FY 2022
onwards

Hotel Management
Japan Co., Ltd.

JPY 3,221MM/year

JPY 3,221 MM/year

Lagoon resort Nago
Co., Ltd.

JPY 550 MM/year

JPY 550 MM/year

K.K. A.I.C Hiroshima
Management

JPY 348 MM/year

JPY 348 MM/year

Hotel Centraza Co.,Ltd.
OW Hotel OperationsKK
KK Narita Kosuge
Operations
KK Narita Yoshikura
Operations
Hotel Management
Co., Ltd.
K.K. HOTELORIENTAL
EXPRESSTokyo Humania
Enterprise Inc.

JPY 425 MM/year

Not
applicable

JPY 425 MM/year

JPY 576 MM/year

JPY 576 MM/year

JPY 444 MM/year

JPY 444 MM/year

JPY 336 MM/year

JPY 336 MM/year

JPY 420 MM/year

JPY 420 MM/year

JPY 110 MM/year

JPY 110 MM/year

JPY 1,600 MM/year

JPY 1,600 MM/year- 36 -

(2) Variable rent
Calculation method of variable rent
No

Name of Property

Before revision

After revision

From FY 2022 onwards
1

Kobe Meriken Park Oriental Hotel

2

Oriental Hotel tokyo bay

3Namba Oriental Hotel

4

Hotel Nikko Alivila

5

Oriental Hotel Hiroshima

6

Oriental Hotel Okinawa Resort & Spa

7

ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)

8

Oriental Hotel Fukuoka Hakata Station

9

Holiday Inn Osaka Namba

10

Hilton Tokyo Narita Airport

11

International Garden Hotel Narita

12

Hotel Nikko Nara

13

Hotel Oriental Express Osaka
Shinsaibashi

14

Hilton Tokyo Odaiba

FY 2022

From FY 2023 onwards

AGOP x 86.0％(Total AGOP of The Five HMJ
Hotels (Note 3) – base amount(¥4,120 million/year (Note 4)))x 85.0%

AGOP x 79.0％
AGOP x 91.0％
AGOP x 74.0％(Total AGOP of The Five HMJ
Hotels (Note 3) – base amount(¥4,120 million/year (Note 4)))x 85.0%

AGOP x 89.0％(AGOP – base amount(¥655 million/year)) x 95.0%(AGOP – base amount(¥360 million/year)) x 90.0%(AGOP – base amount(¥442 million/year)) x 98.0%(AGOP – base amount(¥580 million/year)) x 97.0%(AGOP – base amount(¥450 million/year)) x 93.0%(AGOP – base amount(¥360 million/year)) x 98.0%(AGOP – base amount(¥440 million/year)) x 95.0%(AGOP – base amount(¥128 million/year)) x 91.0%(AGOP – base amount(¥1,660 million/year)) x 98.0%

AGOP x 89.0％
AGOP x 93.0％
AGOP x 97.0％
AGOP x 98.0％
AGOP x 95.0％
AGOP x 95.0％
AGOP x 95.0％
AGOP x 87.0％
AGOP x 97.0％(AGOP – base amount(¥655 million/year)) x 95.0%(AGOP – base amount(¥360 million/year)) x 90.0%(AGOP – base amount(¥442 million/year)) x 98.0%(AGOP – base amount(¥580 million/year)) x 97.0%(AGOP – base amount(¥450 million/year)) x 93.0%(AGOP – base amount(¥360 million/year)) x 98.0%(AGOP – base amount(¥440 million/year)) x 95.0%(AGOP – base amount(¥128 million/year)) x 91.0%(AGOP – base amount(¥1,660 million/year)) x 98.0%(Note 1) AGOP (adjusted GOP) is the amount calculated by subtracting certain fees and other items from GOP. GOP (Gross Operating Profit) is amount calculated
by subtracting various cost for hotel operation (personal cost, general administration cost, etc.) form sales of the hotel.
(Note 2) Stating detail of contract for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.
(Note 3) Five HMJ Hotels are 5 hotels which JHR leases to HMJ (Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba Oriental Hotel, Hotel Nikko
Alivila and Oriental Hotel Hiroshima.
(Note 4) The breakdown of the AGOP base amount of The Five HMJ Hotels (¥4,120 million/year) are as follows. Kobe Meriken Park Oriental Hotel ¥690,000
thousands, Oriental Hotel tokyo bay ¥1,060,000 thousands, Namba Oriental Hotel ¥890,000 thousands, Hotel Nikko Alivila ¥1,250,000 thousands, and Oriental
Hotel Hiroshima ¥230,000 thousands.

(3) Impact on profit and loss by conclusion the memorandum of understandings.
Although fixed rent in amount of JPY 8,030 MM will be reduced from operating revenue due to the conclusion of memorandums ofunderstanding, variable rent will be determined by AGOP of full year for fiscal year 2022. Therefore, it is difficult to reasonably estimate
amount of the impact at this point.

- 37 -

(11) Changes in total number of investment units issued and outstanding
The following is the status of increase (decrease) in the total number of investment units issued and outstanding and unitholders’capital for past five years through to the end of the fiscal year under review.
Total number of investment units
Unitholders’ capital (JPY1M)
issued and outstanding (Units)
Date
Capital transaction
Note
Increase
Increase
Balance
Balance(Decrease)(Decrease)
Capital increase throughJuly 5, 2017
public offering of
236,000
3,997,907
17,715
152,544(Note 1)
investment units
Capital increase throughAugust 2, 2017
third-party allotment of
12,9404,010,847
971
153,516(Note 2)
investment units
Capital increase throughJanuary 23, 2019
public offering of
447,800
4,458,647
33,104
186,620(Note 3)
investment units
Capital increase throughFebruary 20, 2019
third-party allotment of
3,700
4,462,347
273
186,894(Note 4)
investment units
Capital increase throughMarch 16, 2021
third-party allotment of
4,659
4,467,006
300
187,194(Note 5)
investment units(Note 1) New investment units were issued through public offering with an issue price per unit of ¥77,518 (issue value of ¥75,065) in order to procure funds forthe acquisition of new properties, etc.
(Note 2) New investment units were issued through third-party allotment with an issue value per unit of ¥75,065 in order to procure part of funds for futureacquisitions of specified assets, part of funds for repayment of loans, or for repair and capital expenditures to maintain or improve competitiveness ofexisting properties.
(Note 3) New investment units were issued through public offering with an issue price per unit of ¥76,342 (issue value of ¥73,927) in order to procure funds forthe acquisition of new properties, etc.
(Note 4) New investment units were issued through third-party allotment with an issue value per unit of ¥73,927 in order to procure part of funds for the acquisitionof new properties.
(Note 5) New investment units were issued through third-party allotment with an issue value per unit of ¥64,400 in order to procure part of funds for capital
expenditures.

- 38 -

3. Reference information
For detailed information of each property and the operating result of hotels, please see the reference information below as well as the
Financial Results Briefing dated today and the website of JHR (https://www.jhrth.co.jp/en/ir/library.html).

(1) Information on values of assets under management, etc.
A. Investment status
The following outlines the investment status of JHR as of the end of the fiscal year under review.
Assetcategory

Hotel type
(Note 1)

Prefectural
location

Osaka

Real
estate
in
trust

Name

Holiday Inn Osaka Namba
Namba Oriental Hotel
Hotel Oriental Express Osaka Shinsaibashi
ibis Tokyo Shinjuku (Note 4)

the b ikebukuro
CANDEO HOTELS UENO-KOEN
Comfort Hotel Tokyo Higashi Nihombashi
the b hachioji
Tokyo
Smile Hotel Nihombashi Mitsukoshimae
R&B Hotel Ueno Hirokoji
Chisun Hotel Kamata
the b suidobashi
Limited-service
dormy inn·global cabin Asakusa
hotel
Chisun Inn Kamata
ibis Styles Sapporo
Hokkaido
Mercure Sapporo
Hotel Oriental Express
Fukuoka Tenjin (former name: HOTELASCENT FUKUOKA) (Note 5)
Fukuoka
the b hakata
Hakata Nakasu Washington Hotel Plaza
Toyoko Inn Hakata-guchi Ekimae
Kyoto
ibis Styles Kyoto Station
Okinawa
Mercure Okinawa Naha
Kumamoto
Dormy Inn Kumamoto
Nara
Nara Washington Hotel Plaza
SubtotalTokyo
Hilton Tokyo Odaiba
Oriental Hotel tokyo bay
Hilton Tokyo Narita Airport
Chiba
International Garden Hotel Narita
Hotel Francs
ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel) (Note 6)
Full-service hotel Hiroshima
Oriental Hotel Hiroshima
Aichi
Hilton Nagoya
Nara
Hotel Nikko Nara
Hyogo
Kobe Meriken Park Oriental Hotel
FukuokaOriental Hotel Fukuoka Hakata Station
Kanagawa
Mercure Yokosuka
Subtotal
Hotel Nikko Alivila
Oriental Hotel Okinawa Resort & Spa
Okinawa(former name: Okinawa Marriott Resort &Spa) (Note 5)
The Beach Tower Okinawa
Resort hotel
Chiba
Hilton Tokyo Bay
Oriental Hotel Universal City (former
Osaka
name: Hotel Keihan Universal City)(Note 5)Kanagawa
Hakone Setsugetsuka
Subtotal
Real estate in trust – Total
Deposits and other assets (Note 7)
Total assets

As ofDecember 31, 2020
Total amount
Ratio toheld
total assets(JPY1M)(%)(Note 2)
(Note 3)
26,8706.7
14,437
3.6
2,805
0.7
7,830
2.0
6,578
6,606
3,491
2,664
2,042
1,806
1,447
1,173
934
768
6,492
5,735

1.6
1.7
0.9
0.7
0.5
0.5
0.4
0.3
0.2
0.2
1.6
1.4

6,567
6,567
3,457
2,683
2,028
1,794
1,452
1,170
930
775
6,432
5,671

1.7
1.7
0.9
0.7
0.5
0.5
0.4
0.3
0.2
0.2
1.6
1.4

5,450

1.4

5,716

1.4

2,329
2,038
1,401
6,623
2,801
2,170
1,764
116,265
63,376
17,19013,088
9,127
3,145

0.6
0.5
0.4
1.7
0.7
0.5
0.4
29.0
15.8
4.3
3.3
2.3
0.8

2,345
2,054
1,382
6,599
2,784
2,203
1,736
108,259
63,266
16,94513,015
9,059
3,141

0.6
0.5
0.4
1.7
0.7
0.6
0.4
27.5
16.0
4.3
3.3
2.3
0.8

17,215

4.3

17,0604.3

4,048
15,695
10,254
9,482
9,251
1,606
173,483
17,790

1.0
3.9
2.6
2.4
2.3
0.4
43.3
4.4

4,043
15,618
10,145
9,337
8,955
1,598
172,186
17,627

1.0
4.0
2.6
2.4
2.3
0.4
43.7
4.5

14,745

3.7

14,5973.7

6,490
26,289

1.6
6.6

6,472
26,159

1.6
6.6

5,830

1.5

7,019

1.8

3,616
74,763364,51235,783400,296

0.9
18.7
91.1
8.9
100.0

3,593
75,469355,915
38,408394,323

0.9
19.1
90.3
9.7
100.0

Amount(JPY1M)
Total liabilities
Total net assets

179,095
221,201- 39 -

As ofDecember 31, 2021
Total amount
Ratio toheld
total assets(JPY1M)(%)(Note 2)
(Note 3)26,757
6.8
14,354
3.6
2,793
0.7
-

Ratio tototal assets
(%)
44.7
55.3

Amount(JPY1M)
172,781
221,542

Ratio tototal assets
(%)
43.8
56.2

(Note 1)

Hotels are categorized as limited-service hotels, full-service hotels or resort hotels according to the manner of operation.

(Note 2)

For real estate in trust, “Total amount held” shows the amount calculated by deducting accumulated depreciation from acquisition price (including
expenses incidental to acquisition).

(Note 3)(Note 4)

“Ratio to total assets” shows the ratio of total amount of each asset held to total assets, rounded off to one decimal place.
ibis Tokyo Shinjuku was transferred on December 15, 2021.

(Note 5)

Through rebranding, HOTEL ASCENT FUKUOKA changed its name to Hotel Oriental Express Fukuoka Tenjin on June 18, 2021, Hotel Keihan
Universal City changed its name to Oriental Hotel Universal City on July 1, 2021, and Okinawa Marriott Resort & Spa changed its name to Oriental(Note 6)(Note 7)

Hotel Okinawa Resort & Spa on October 1, 2021. The same shall apply hereinafter in this document.
ACTIVE-INTER CITY HIROSHIMA is classified in accordance with the business category of Sheraton Grand Hiroshima Hotel, its main facility.
Includes machinery and equipment, tools, furniture and fixtures, construction in progress in trust, and intangible assets (excluding leasehold rights intrust and fixed-term land lease right in trust).

- 40 -

B. Assets under management(A) Major issues of investment securities
Not applicable.
(B) Real estate properties under management
Not applicable.
(C) Other major assets under management
A. Summary of real estate properties (in trust) under management
The following summarizes the real estate properties (in trust) under management by JHR as of the end of the fiscal year under review.
a. Details of assets under management (acquisition price, etc.)
Property
No.

Name

Grade
(Note 1)
Upper-middle

Investment
Carrying
Appraisalratio
amount at end value at end of Appraisal(Acquisition Collateralof period
periodagencyprice)(Note 7)
(JPY1M)(JPY1M)(Note 5)(%)(Note 3)(Note 4)(Note 6)
10,9009,541
14,000N
3.0 Unsecured

Acquisition
price(JPY1M)(Note 2)

1

Kobe Meriken Park Oriental Hotel

2

Oriental Hotel tokyo bay

Mid-price

19,90017,10632,200N

5.5

Unsecured

3

Namba Oriental Hotel

Mid-price

15,00014,427

31,400N

4.1

Unsecured

4

Hotel Nikko Alivila

Luxury18,90017,83928,800N

5.2

Unsecured

5

Oriental Hotel Hiroshima

Upper-middle

4,100

4,100

4,230

N

1.1

Unsecured

8

The Beach Tower Okinawa

Mid-price

7,610

6,476

9,980

N

2.1

Unsecured

9

Hakone Setsugetsuka

Mid-price

4,070

3,599

5,260

N

1.1

Unsecured

10

Dormy Inn Kumamoto

Mid-price

2,334

2,203

2,950

N

0.6

Unsecured

12

the b suidobashi

Mid-price

1,120

1,187

2,280

N

0.3

Unsecured13

dormy inn·global cabin Asakusa

Economy

999

930

1,300

J

0.3

Unsecured

14

Hakata Nakasu Washington Hotel Plaza

Mid-price

2,130

2,054

4,530

N

0.6

Unsecured

15

Nara Washington Hotel Plaza

Mid-price

2,050

1,736

2,430

N

0.6

Unsecured16

R&B Hotel Ueno Hirokoji

Economy

1,720

1,794

1,900

J

0.5

Unsecured

18

Comfort Hotel Tokyo Higashi Nihombashi

Economy

3,746

3,457

5,340

J

1.0

Unsecured

22

Smile Hotel Nihombashi Mitsukoshimae

Economy

2,108

2,028

2,930

J

0.6

Unsecured24

Toyoko Inn Hakata-guchi Ekimae

Economy

1,652

1,382

2,760

T

0.5

Unsecured

25

Chisun Hotel Kamata

Economy

1,512

1,467

2,020

T

0.4

Unsecured

26

Chisun Inn Kamata

Economy

823

782

1,370

T

0.2

Unsecured

29

Oriental Hotel Universal City (Note 8)

Mid-price

6,753

7,292

16,700R

1.9

Unsecured

31

Hilton Tokyo Bay

Luxury26,05026,16940,300D

7.2

Unsecured32

ibis Styles Kyoto Station

Mid-price

6,600

6,615

9,990

D

1.8

Unsecured33

ibis Styles Sapporo

Mid-price

6,797

6,463

11,100N

1.9

Unsecured34

Mercure Sapporo

Mid-price

6,000

5,726

10,500N

1.7

Unsecured35

Mercure Okinawa Naha

Mid-price

3,000

2,821

6,950

N

0.8

Unsecured37

the b ikebukuro

Mid-price

6,520

6,579

7,230

N

1.8

Unsecured39

the b hachioji

Mid-price

2,610

2,702

2,570

N

0.7

Unsecured40

the b hakata

Mid-price

2,300

2,362

4,340

N

0.6

Unsecured

41

Hotel Francs

Mid-price

3,105

3,141

4,040

D

0.9

Unsecured42

Mercure Yokosuka

Mid-price

1,650

1,627

3,360

D

0.5

Unsecured

43

Upper-middle

14,95014,72817,300N

4.1

Unsecured

Luxury17,32017,15320,700D

4.8

Unsecured

45

Oriental Hotel Okinawa Resort & Spa
ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)
CANDEO HOTELS UENO-KOEN

Mid-price

6,705

6,574

7,440

D

1.8

Unsecured

46

Oriental Hotel Fukuoka Hakata Station

Upper-middle

7,197

9,123

15,200D

2.0

Unsecured

47

Holiday Inn Osaka Namba

Mid-price

27,00026,78826,600N

7.4

Unsecured

48

Hotel Oriental Express Fukuoka Tenjin

Mid-price

5,248

5,828

6,520

D

1.4

Unsecured

44

49

Hilton Nagoya

50

Hilton Tokyo Narita Airport

51

International Garden Hotel Narita

52

Hotel Nikko Nara

53

Hotel Oriental Express Osaka Shinsaibashi

54

Hilton Tokyo Odaiba
Total

Luxury15,25015,61814,800D

4.2

Unsecured

Upper-middle

13,175

13,252

13,600N

3.6

UnsecuredMid-price

9,125

9,124

9,520

N

2.5

Unsecured

Upper-middle

10,373

10,238

9,800

D

2.9

UnsecuredMid-price

2,738

2,816

2,840

D

0.8

UnsecuredN

17.2

Unsecured

Upper-middle

62,40063,486

68,400363,542358,352

485,480- 41 -

100.0

(Note 1)

JHR categorizes hotels into the four grade classes of “Luxury,” “Upper-middle,” “Mid-price” and “Economy” mainly from the perspective of average(Note 2)

daily rate, etc.
“Acquisition price” is the acquisition price stated on the purchase and sale agreement for beneficial interest in trust, etc. (consumption tax, local
consumption tax and the acquisition expense such as broker’s fee are not included). The acceptance prices are indicated for the properties that havebeen accepted through the Merger.

(Note 3)“Carrying amount at end of period” is the book value at the end of the fiscal year under review and includes the amounts for not only real estate in trust
but also machinery and equipment, tools, furniture and fixtures, construction in progress in trust and intangible assets.

(Note 4)

“Appraisal value at end of period” is the appraisal value at the end of the fiscal year under review as the date of appraisal, in accordance with the asset
valuation methods and standards provided in JHR’s Articles of Incorporation and the regulations set forth by The Investment Trusts Association, Japan.

(Note 5)

Under “Appraisal agency,” the letters indicate the appraisers for the properties as follows:N:
Nihon Fudosan Kenkyusho (Japan Real Estate Institute)J:
T:

JLL Morii Valuation & Advisory K.K.
The Tanizawa Sōgō Appraisal Co., Ltd.

R:
D:Rich Appraisal Institute Co., Ltd.
DAIWA REAL ESTATE APPRAISAL CO., LTD.

(Note 6)

“Investment ratio” is the ratio of acquisition price of the respective asset held at the end of the fiscal year under review to the total amount of acquisition
price of all assets held at the end of the fiscal year under review and is rounded off to one decimal place.

(Note 7)(Note 8)“Collateral” is whether or not a pledge has been established for the beneficial interest in trust.
For Oriental Hotel Universal City, acquisition price has changed as JHR acquired part of its site on July 30, 2021.

(Note 9)The omitted property numbers are the property numbers of assets that have been transferred.

b. Details of assets under management (change in tenants of portfolio)
The following is the change in total number of tenants, total leasable area, total leased area, and occupancy rate, etc. of real estate
properties (in trust) under management for the past five years.

Total number oftenants(Note 1)
Total leasable area
(Note 2)
Total leased area
(Note 3)
Occupancy rate
(Note 4)(Note 1)

End of18th period
December 2017

End of19th period
December 2018

End of20th period
December 2019

End of21st period
December 2020

End of22nd period
December 2021

131

126

125

121

116

687,124.54 m2

678,714.48 m2

746,329.68 m2

741,083.02 m2

733,995.61 m2

686,694.46 m2

677,863.00 m2

745,227.67 m2

740,146.96 m2

732,764.69 m2

99.9%

99.9%

99.9%

99.9%

99.8%

Total number of tenants indicates the total number of tenants based on the lease contracts for respective real estate in trust (excluding tenants of parking
lots, etc.) as of the end of each fiscal period. However, for properties for which master lease contracts under the pass-through scheme are concluded inwhich trustee receives the same amount of rents, etc. from end tenants as is in principle, the total number of end tenants (excluding tenants of parking
lots, etc.) is indicated.

(Note 2)

In principle, total leasable area represents leasable area of the building, which does not include leasable area of land (including parking lots on ground),based on a lease contract or plan for each real estate in trust. For properties in which the leased area is not described in the lease contract, leasable area
represents the area described in the registration of the building. Furthermore, when the leasable area in the lease contract is indicated in tsubo units, thefigure in the table has been converted to the area in metric units (3.30578 square meters per one tsubo). The same shall apply hereinafter.

(Note 3)

In principle, total leased area represents the leased area described in the lease contract of the building. For properties in which the leased area is notdescribed in the lease contract, leased area shows the area described in the registration of the building. Furthermore, when the leased area in the lease
contract is indicated in tsubo units, the figure in the table has been converted to the area in metric units (3.30578 square meters per one tsubo). However,for properties for which master lease contracts under the pass-through scheme are concluded in which trustee receives the same amount of rents, etc.
from end tenants as is in principle, the total area for which lease contracts have been concluded with end tenants and which are actually leased isindicated. The same shall apply hereinafter.

(Note 4)

Occupancy rate indicates the percentage of leased area to leasable area of respective real estate properties in trust as of the end of each fiscal period.
The same shall apply hereinafter.

- 42 -

c. Details of assets under management (information on major real estate)
Major real estate of which total annual rent accounts for 10% or more of the total annual rent (Note 1) of the entire portfolio is
as follows.

Property name

Total number oftenants

Hilton Tokyo Bay(Note 1)

Total annual rent1

Total leased area

64,928.83 m2(Note 3)(Note 2)

Total leasablearea

Change in occupancy rate
for the past five years

64,928.83 m2(Note 3)

December 2017100.0%

December 2018

100.0%

December 2019100.0%

December 2020

100.0%

December 2021

100.0%“Total annual rent” is the amount of (i) the amount arrived at when monthly fixed rent (rent of the building itself only, excluding common area
maintenance charges and signage and parking usage fees; not factoring in any change in rent during the fiscal year) in lease contracts at the end of the
fiscal year under review is multiplied by 12, plus (ii) actual amounts of revenue sharing, variable rent or income from management contracts for fullyear.

(Note 2)
(Note 3)

Total annual rent for Hilton Tokyo Bay is not disclosed as consent for disclosure has not been obtained from the tenant.
The building of Hilton Tokyo Bay is co-owned with other right holders, and JHR owns co-ownership interest for 64,928.83 square meters (JHR owns
9/10 of co-ownership interest).

d. Details of assets under management (NOI, etc.)
PropertyNo.

Name

Rent type(Note 1)

Real estate
operating revenue(JPY 1,000)
36,169NOINOI after depreciation(Note 2)
(Note 3)
(JPY 1,000)(JPY 1,000)(212,487)(512,615)

1

Kobe Meriken Park Oriental Hotel

Variable/Fixed (Note 4)2

Oriental Hotel tokyo bay

Variable/Fixed (Note 4)-(117,418)

3

Namba Oriental Hotel

Variable/Fixed (Note 4)

288,185

184,123

43,891

4

Hotel Nikko Alivila

Variable/Fixed (Note 4)

155,138

7,490(264,514)

5

Oriental Hotel Hiroshima

Variable/Fixed (Note 4)

297,027

253,111

165,437

6

ibis Tokyo Shinjuku (Note 5)

Management contract

155,682

45,255(63,024)

8

The Beach Tower Okinawa

Fixed

511,008

467,161

349,692(472,614)

9

Hakone Setsugetsuka

Fixed294,953

268,884

172,602

10

Dormy Inn Kumamoto

Fixed

194,460

171,797

121,52412

the b suidobashi

Variable/Fixed

12,999585(27,676)

13

dormy inn·global cabin Asakusa

Fixed

63,99555,24142,852

14

Hakata Nakasu Washington Hotel Plaza (Note 6)

Fixed

240,000

225,000

198,000

15

Nara Washington Hotel Plaza (Note 6)

Fixed

150,000

134,000

98,000

16

R&B Hotel Ueno Hirokoji

97,291

82,942

66,201

18

Comfort Hotel Tokyo Higashi Nihombashi

271,527

240,418

203,217

22

Smile Hotel Nihombashi Mitsukoshimae

134,400

118,183

97,65724

Toyoko Inn Hakata-guchi Ekimae

FixedVariable/Fixed(Note 7)
Variable/Fixed(Note 7)
Fixed

141,039

127,392

109,18525

Chisun Hotel Kamata

Variable

15,471

895(31,289)

26

Chisun Inn Kamata

Variable

2,067(4,949)(16,855)

29

Oriental Hotel Universal City (Note 8) (Note 9)

470,935

383,666

214,763

31

Hilton Tokyo Bay

1,979,352

1,698,065

1,510,545

32

ibis Styles Kyoto Station (Note 8)

Variable/Fixed
Variable/Fixed(Note 7)
Management contract

46,354(12,216)(48,799)

33

ibis Styles Sapporo (Note 8)

Management contract

55,899(29,526)(112,230)

34

Mercure Sapporo (Note 8)

Management contract

115,880(75,091)(166,345)

35

Mercure Okinawa NahaManagement contract-(62,176)(127,978)37

the b ikebukuro

Variable/Fixed

404,891

376,668

346,94139

the b hachioji

Variable/Fixed

45,07620,002(15,671)40

the b hakata

Variable/Fixed

35,522

22,76443

41

Hotel Francs

Fixed

300,000

238,760

193,570

Variable

242,325

148,326

110,466-(95,798)(371,571)

42

Mercure Yokosuka

43

Variable/Fixed (Note 4)

881,883

503,832

280,434

45

Oriental Hotel Okinawa Resort & Spa
ACTIVE-INTER CITY HIROSHIMA(Sheraton Grand Hiroshima Hotel)
CANDEO HOTELS UENO-KOEN

Fixed

349,971323,623

283,287

46

Oriental Hotel Fukuoka Hakata Station

Variable/Fixed (Note 4)

243,867(4,307)(420,532)

44

Variable/Fixed (Note 4)- 43 -

Property
No.

Name

47

Holiday Inn Osaka Namba (Note 8)48

Hotel Oriental Express Fukuoka Tenjin (Note 10)49

Hilton Nagoya

50

Hilton Tokyo Narita Airport

51
52
53
54

Rent type(Note 1)
Variable/Fixed (Note 4)

Real estate
operating revenue(JPY 1,000)
71,921

NOI(Note 2)(JPY 1,000)
23,283

NOI after depreciation(Note 3)
(JPY 1,000)(138,142)
220,739

Variable/Fixed

405,369

298,308

Variable

780,207

193,796

17,660

Variable/Fixed (Note 4)

41,475(41,239)(255,199)

International Garden Hotel Narita

Variable/Fixed (Note 4)

284,359

240,177

87,894

Hotel Nikko Nara
Hotel Oriental Express Osaka Shinsaibashi(Note 8)Hilton Tokyo Odaiba

Variable/Fixed (Note 4)-(47,382)(198,977)

Variable/Fixed (Note 4)-(14,004)(28,513)

Variable/Fixed (Note 4)

Total

522,633

194,733(96,249)

10,340,570

6,332,632

1,566,305(Note 1)

Under “Rent type,” “Fixed” is a property under a fixed rent structure, “Variable” is a property under a variable rent structure, “Management contract”
is a property under a management contract structure, and “Variable/Fixed” is a property under a combination of fixed and variable rent structures.

(Note 2)

NOI = Real estate operating revenue − Real estate operating costs + Depreciation + Loss on retirement of noncurrent assets + Asset retirement
obligations expenses(Note 3)(Note 4)

NOI after depreciation (net real estate operating income) = Real estate operating revenue − Real estate operating costs
For the HMJ Group Hotels, only variable rent is paid in the fiscal year ending December 2021 and no fixed rent will be incurred.

(Note 5)(Note 6)

Ibis Tokyo Shinjuku was transferred on December 15, 2021.
For Hakata Nakasu Washington Hotel Plaza and Nara Washington Hotel Plaza, consent on disclosure of rent in units of thousand yen has not been

(Note 7)

obtained from the lessees and numbers are thus rounded down to the nearest million yen.
For Comfort Hotel Tokyo Higashi Nihombashi, Smile Hotel Nihombashi Mitsukoshimae, and Hilton Tokyo Bay, the rent structure is one that has set(Note 8)not only fixed rent but also partial rent based on a revenue sharing structure.
Temporarily closed for some time during the fiscal year under review due to the impact of the spread of the infection by COVID-19.

(Note 9)Rent type for Oriental Hotel Universal City that apply from July 1, 2021, are indicated. However, the variable rent will be incurred in the fiscal year
ending December 2022 onward. Rent type for Hotel Keihan Universal City through June 30, 2021, were variable (revenue sharing)/fixed.

(Note 10) Rent type for Hotel Oriental Express Fukuoka Tenjin that apply from June 18, 2021, are indicated. However, the variable rent will be incurred in thefiscal year ending December 2022 onward. The rent type for HOTEL ASCENT FUKUOKA was fixed before June 17, 2021.
(Note 11) The property numbers of assets that were sold before the end of the previous fiscal year are intentionally omitted.

- 44 -

B. Income statements for individual real estate properties (in trust) under management
The following is the individual income statements for real estate properties (in trust) under management for the fiscal year underreview (from January 1, 2021 to December 31, 2021). Figures are rounded down to the nearest thousand yen in principle, but areotherwise noted if circumstances do not allow for the figures to be stated in units of thousand yen.
Property No.

-

Property name

Portfolio total(Note 1)

1
Kobe
Meriken Park
Oriental Hotel

2

3

4

5

Oriental Hoteltokyo bay

Namba
Oriental Hotel

Hotel Nikko
AlivilaOriental Hotel
Hiroshima

Number of operating days

-

365

365

365

365

365

(A) Real estate operating revenue subtotal

10,340,570

36,169-288,185

155,138

297,027

Fixed rent

6,413,988

-

-

-

-

-

Variable rent

3,088,450

35,200-288,185

155,138

297,027

Other revenue

838,131

969

-

-

-

-

(B) Real estate operating costs subtotal

8,774,265

548,785472,614244,293419,653

131,589

Land lease and other rent expenses

857,819

192,711--

84,149-Property taxes

1,947,316

49,066110,933

99,58456,03440,367

Outsourcing expenses

494,005

960

960

960

1,920

960

Nonlife insurance

73,031

4,598

4,514

1,800

3,420

1,428

Depreciation and amortization

4,748,022

299,905

351,060

139,669

271,985

87,612

Loss on retirement of noncurrent assets

16,682

223

4,136

562

19

61

Other costs

637,388

1,320

1,009

1,717

2,124

1,160

(C) Net real estate operating income = (A) − (B)1,566,305(512,615)(472,614)

43,891(264,514)

165,437(Reference) Occupancy rate

99.8%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

116

1

1

1

1

1

Property No.

6

8

ibis
The Beach Tower
Tokyo Shinjuku
Okinawa(Note 1) (Note 5)

Property name

9

10

12

13

HakoneSetsugetsuka

Dormy Inn
Kumamoto

the bsuidobashi

dormy inn·global
cabin Asakusa

Number of operating days

348

365

365

365

365

365

(A) Real estate operating revenue subtotal

155,682

511,008

294,953

194,460

12,99963,995

Fixed rent

92,630511,008

294,340

194,460

12,99963,395

Variable rent

33,926

-

-

-

-

-

Other revenue

29,125

-

613

-

-

600

(B) Real estate operating costs subtotal

218,706

161,315

122,350

72,93540,67621,142Land lease and other rent expenses

-

-

-

-

-

-

Property taxes

33,68539,41422,936

19,889

7,940

6,030

Outsourcing expenses

43,979

-

-

-

1,200

1,200

Nonlife insurance

741

1,624

946

624

267

167

Depreciation and amortization

108,279

117,469

96,28150,272

28,261

12,389Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

32,020

2,807

2,186

2,147

3,007

1,356

(C) Net real estate operating income = (A) − (B)(63,024)

349,692

172,602

121,524(27,676)

42,852(Reference) Occupancy rate－

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

－

1

1

1

1

1

- 45 -

Property No.

14

15

16

18

22

24

Hakata Nakasu
Washington Hotel
Plaza (Note 2)

Nara
Washington
Hotel Plaza(Note 2)

R&B Hotel
Ueno
Hirokoji

Comfort HotelTokyo Higashi
Nihombashi

Smile Hotel
Nihombashi
Mitsukoshimae

Toyoko Inn
Hakata-guchi
EkimaeNumber of operating days

365

365

365

365

365

365

(A) Real estate operating revenue subtotal

240,000

150,000

97,291

271,527

134,400

141,039

Fixed rent

240,000

146,000

96,504

260,321

134,400

141,039

Variable rent

-

-

-

-

-

-

Other revenue

0

3,000

786

11,205--(B) Real estate operating costs subtotal

42,00052,00031,09068,30936,74231,853

Land lease and other rent expenses

-

-

-

-

-

-

Property taxes

11,00011,00012,052

26,495

12,978

11,071

Outsourcing expenses

1,000

3,000

840

1,614

1,200

1,080

Nonlife insurance

0

0

244

606

274

367

Depreciation and amortization

27,00036,00016,74037,201

20,52618,206

Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

1,000

0

1,213

2,392

1,763

1,127

(C) Net real estate operating income = (A) − (B)198,000

98,00066,201

203,21797,657

109,185(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

1

2

1

2

1

1

Property name

Property No.

25

26

29

31

32

Property name

Chisun Hotel
KamataChisun Inn
KamataOriental Hotel
Universal City
(Note 3)

HiltonTokyo Bay

33

ibis Styles
ibis Styles
Kyoto Station
Sapporo(Note 1) (Note 3) (Note 1) (Note 3)

Number of operating days

365

365

365

365

365

365

(A) Real estate operating revenue subtotal

15,471

2,067

470,935

1,979,352

46,35455,899Fixed rent--

22,791

15,401

2,067

-

-

Other revenue

70-

Undisclosed(Note 4)
Undisclosed(Note 4)
Undisclosed(Note 4)42,334

Variable rent

Undisclosed(Note 4)
Undisclosed(Note 4)
Undisclosed(Note 4)

4,019

33,107(B) Real estate operating costs subtotal

46,76018,923

256,172

468,806

95,153

168,129

Land lease and other rent expenses--

12,257

123,720--

Property taxes

11,6704,773

44,825

139,546

21,05236,964

Outsourcing expenses

1,200

1,080

3,130

11,94836,173

14,349Nonlife insurance

319

130

2,224

4,732

483

1,319

Depreciation and amortization

32,185

11,906

163,950

187,519

36,58282,703

Loss on retirement of noncurrent assets

-

-

4,952

-

-

-

Other costs

1,385

1,033

24,8301,340

861

32,792(C) Net real estate operating income = (A) − (B)(31,289)(16,855)

214,763

1,510,545(48,799)(112,230)(Reference) Occupancy rate

100.0%

100.0%

100.0%

100.0%

100.0%

99.4%(Reference) Number of tenants

1

1

1

1

2

5

- 46 -

Property No.

34

35

37

39

40

41

Property nameMercureSapporo(Note 1) (Note 3)

MercureOkinawa Naha
(Note 1)the bikebukuro

the bhachioji

the bhakataHotel Francs

Number of operating days

365

365

365

365

365

365

(A) Real estate operating revenue subtotal

115,880-

404,891

45,07635,522300,000

Fixed rent

52,199-102,674

37,99835,522300,000

Variable rent--

300,705---

Other revenue

63,680

-

1,512

7,077

-

-

(B) Real estate operating costs subtotal

282,225

127,978

57,94960,74735,478106,429

Land lease and other rent expenses

45

327

-

-

-

-

Property taxes

48,96923,21921,936

20,87910,01257,201

Outsourcing expenses

76,61736,424

1,200

1,326

1,200

1,800

Nonlife insurance

1,543

1,084

578

671

362

1,543

Depreciation and amortization

91,25365,801

29,72635,67422,72145,189Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

63,796

1,119

4,507

2,196

1,182

694

(C) Net real estate operating income = (A) − (B)(166,345)(127,978)346,941(15,671)43

193,570(Reference) Occupancy rate

95.7%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

11

1

3

10

2

1

Property No.

42

43

Property nameMercureYokosuka

44

Oriental Hotel ACTIVE-INTER
Okinawa Resort
CITY
& Spa
HIROSHIMA

45

46

47

CANDEOHOTELS
UENO-KOEN

Oriental Hotel
Fukuoka Hakata
StationHoliday Inn
Osaka Namba(Note 3)

Number of operating days

365

365

365

365

365

365

(A) Real estate operating revenue subtotal

242,325-

881,883

243,867

71,921

Fixed rent--

490,133

349,971
Undisclosed(Note 4)--

Variable rent

210,736-

180,775

243,867

71,921Other revenue

31,589-210,974

Undisclosed(Note 4)--(B) Real estate operating costs subtotal

131,859

371,571

601,449

66,684

664,399

210,063

Land lease and other rent expenses

-

-

-

-

222,206-

Property taxes

33,446

77,151

119,333

22,62820,24344,848Outsourcing expenses

20,3282,400

96,376

1,200

3,000

1,560

Nonlife insurance

2,184

3,415

4,845

691

1,773

1,391

Depreciation and amortization

37,859275,131

223,398

40,335408,518

161,426

Loss on retirement of noncurrent assets

-

641

-

-

6,084

-

Other costs

38,03912,831

157,495

1,827

2,573

837

(C) Net real estate operating income = (A) − (B)110,466(371,571)

280,434

283,287(420,532)(138,142)(Reference) Occupancy rate

100.0%

100.0%

99.5%

100.0%

100.0%

100.0%(Reference) Number of tenants

1

1

40

1

1

1

- 47 -

Property No.

48

49

50

51

52

53

Hotel Oriental
Express Osaka
Hotel Nikko Nara
Shinsaibashi(Note 3)

Hotel Oriental
Express Fukuoka
TenjinHilton Nagoya

Hilton Tokyo
Narita Airport

International
Garden Hotel
NaritaNumber of operating days

365

365

365

365

365

365

(A) Real estate operating revenue subtotal

405,369

780,20741,475284,359--

Property name

Undisclosed(Note 4)
Undisclosed(Note 4)
Undisclosed(Note 4)

-

-

-

-

41,475284,359

-

-

-

-

-

-

Fixed rent

292,458

Variable rent-

Other revenue

112,910(B) Real estate operating costs subtotal

184,629

762,547

296,675

196,465

198,977

28,513

Land lease and other rent expenses-

222,401

-

-

-

-

Property taxes

31,33898,892

74,63038,92340,438

11,148Outsourcing expenses

12,783

98,586

2,520

2,280

2,400

2,160

Nonlife insurance

669

4,581

4,613

2,038

3,282

201

Depreciation and amortization

77,568176,135

213,960

152,282

151,595

14,509Loss on retirement of noncurrent assets

-

-

-

-

-

-

Other costs

62,269161,949

951

940

1,260

494

(C) Net real estate operating income = (A) − (B)220,739

17,660(255,199)

87,894(198,977)(28,513)(Reference) Occupancy rate

96.1%

100.0%

100.0%

100.0%

100.0%

100.0%(Reference) Number of tenants

5

4

1

1

1

1

Property No.

54

Property name

Hilton Tokyo
OdaibaNumber of operating days

365(A) Real estate operating revenue subtotal

522,633

Fixed rent-

Variable rent

522,633

Other revenue-(B) Real estate operating costs subtotal

618,882

Land lease and other rent expenses-

Property taxes

321,200

Outsourcing expenses

120

Nonlife insurance

5,744

Depreciation and amortization

290,983

Loss on retirement of noncurrent assets-

Other costs

833(C) Net real estate operating income = (A) − (B)(96,249)(Reference) Occupancy rate

100.0%(Reference) Number of tenants1(Note 1)
(Note 2)

Variable rent includes income from management contracts. For details of the management contract, please refer to “C. Overview of the hotel business;
a. Rent structures of hotels with variable rent, management contract or revenue sharing” on page 49.
Consent on disclosure of rent in units of thousand yen has not been obtained from the lessee and numbers are thus rounded down to the nearest million
yen.

(Note 3)

Temporarily closed for some time during the fiscal year under review due to the impact of the spread of COVID-19.

(Note 4)

Undisclosed as consent on disclosure has not been obtained from the tenant with whom a lease contract has been concluded.

(Note 5)

ibis Tokyo Shinjuku was transferred on December 15, 2021.

(Note 6)

The property numbers of assets that were sold before the end of the previous fiscal year are intentionally omitted.

- 48 -

C. Overview of the hotel businessa. Rent structures of hotels with variable rent, management contract or revenue sharing
Name

1

Kobe Meriken Park Oriental Hotel

2

Oriental Hotel tokyo bay

3Namba Oriental Hotel

4

Hotel Nikko Alivila

AGOP x 74.0%5Oriental Hotel Hiroshima
Oriental Hotel Universal City
(Note 1)AGOP x 89.0%
Not(AGOP – base amount (¥370 million/year)) x 95.0%
applicable

29
43
The
HMJ
Group

44
46
47
48

The
Ishin
Group s

(Note 1)

ACTIVE-INTER CITYHIROSHIMA(Sheraton Grand Hiroshima Hotel)
Oriental Hotel Fukuoka Hakata
StationHoliday Inn Osaka Namba
Hotel Oriental Express
Fukuoka Tenjin(Note 1)

FY2021AGOP (Note 2) x 86.0%
AGOP x 79.0%
Variable/Fixed

Variable/Fixed(Total AGOP of The Five HMJ Hotels– base amount (¥4,120 million/year (Note 4))) x 85.0%

AGOP x 91.0%

Variable/Fixed

AGOP x 89.0%(AGOP – base amount (¥655 million/year)) x 95.0%

Variable/Fixed(Note 2)AGOP x 93.0%(AGOP – base amount (¥360 million/year)) x 90.0%

Variable/Fixed

AGOP x 97.0%(AGOP – base amount (¥442 million/year)) x 98.0%

Variable/Fixed

AGOP x 98.0%

Variable/FixedNotapplicable(AGOP – base amount (¥580 million/year)) x 97.0%(AGOP – base amount (¥165 million/year)) x 97.0%

Hilton Tokyo Narita Airport

Variable/Fixed

AGOP x 95.0%

51
52

Variable/Fixed
Variable/Fixed

AGOP x 95.0%
AGOP x 95.0%

Variable/Fixed

AGOP x 87.0%(AGOP – base amount (¥128 million/year)) x 91.0%

54
6International Garden Hotel Narita
Hotel Nikko Nara
Hotel Oriental Express Osaka
Shinsaibashi
Hilton Tokyo Odaiba
ibis Tokyo Shinjuku (Note 5)(AGOP – base amount(¥450 million/year)) x
93.0%(AGOP – base amount (¥360 million/year)) x 98.0%(AGOP – base amount (¥440 million/year)) x 95.0%

Variable/Fixed

AGOP x 97.0%
Amount equivalent to GOP(AGOP – base amount (¥1,660 million/year)) x 98.0%

32

ibis Styles Kyoto Station

33

ibis Styles Sapporo

34

Mercure Sapporo

35

Mercure Okinawa Naha

42

Mercure Yokosuka

12

the b suidobashi

37

the b ikebukuro39

the b hachioji

40

the b hakata
Comfort Hotel Tokyo Higashi
Nihombashi
Smile Hotel Nihombashi
Mitsukoshimae

18
Other
hotelswithvariablerentorrevenuesharing

Oriental Hotel Okinawa Resort & Spa

Rent type

50

53

The
Accor
Group

Method of calculating variable rent and income from management contracts
FY2022
FY2023 and after

PropertyNo.

22

Management
contract(Note 6)

VariableAmount linked to GOP (Note 6)
Amount linked to GOP (Note 7)

Variable/Fixed

Fixed +
Revenue sharing
Fixed +
Revenue sharing

25

Chisun Hotel Kamata

Variable

26

Chisun Inn Kamata

Variable

31

Hilton Tokyo Bay

49

Hilton Nagoya

Fixed +
Revenue sharing
VariableAmount that is a certain percentage of sales exceeding the threshold(Note 7)
Amount that is a certain percentage of sales exceeding the threshold(Note 7)
Amount that is the monthly GOP multiplied by 86.0%(¥0 if the amount is below ¥0).
Amount that is the monthly GOP multiplied by 86.0%(¥0 if the amount is below ¥0).
Amount that is a certain percentage of sales exceeding the threshold(Note 7)
Variable rents linked to hotel sales, etc. (Note 7)

Rents applied from July 1, 2021 onward for Oriental Hotel Universal City and rents applied from June 18, 2021 onward for Hotel Oriental Express
Fukuoka Tenjin are indicated.
Variable rent for HMJ Group Hotels (not include 2 hotels mentioned above) are rent applied from January 1, 2022 based on memorandums ofunderstanding relating to change fixed-term building lease contracts concluded on February 25, 2022

(Note 2)The indicated figures are for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.

(Note 3)

AGOP (adjusted GOP) is the amount calculated by subtracting certain fees and other items from GOP. The same shall apply hereinafter.

(Note 4)

For the purpose of payments of variable rent from each hotel, etc. JHR has set individual base amount for each hotel. The breakdown of the base amountof The Five HMJ Hotels (¥4,120 million/year) are as follows.
Kobe Meriken Park Oriental Hotel ¥690,000 thousands, Oriental Hotel tokyo bay ¥1,060,000 thousands, Namba Oriental Hotel ¥890,000 thousands,
Hotel Nikko Alivila ¥1,250,000 thousands, and Oriental Hotel Hiroshima ¥230,000 thousands.

(Note 5)

ibis Tokyo Shinjuku was transferred on December 15, 2021.

(Note 6)The management contract structure is a structure for hotel real estate owned by JHR in which JHR entrusts an operator to operate the hotel and takes
in the outcome of that business as real estate operating revenue. Specifically, JHR, the owner of the hotel real estate, concludes a management contract
with an operator and entrusts the operator with the tasks necessary to run the hotel business. JHR receives the hotel revenue achieved from the hotelbusiness (operation) by the operator and, at the same time, pays a management fee to the operator. This hotel revenue achieved is recognized as “realestate operating revenue through management contract” and is equivalent to the rent that is the real estate operating revenue under the leasing structure.

(Note 7)The detailed content of the contract is not disclosed as consent on disclosure has not been obtained from the lessee.

- 49 -

b.

Major indicators of the hotel business
The following tables indicate the figures related to the hotel business of the HMJ Group Hotels for the operating period fromJanuary 1, 2021, through December 31, 2021, based on the data provided by the hotel lessees. While these indicators of thehotels are among the indicators that show the operating status of the rooms departments, please note that they do not necessarily
represent the operating revenue and the ability to bear rent, etc. of the respective hotels, as the room rates and profit margins,etc. of the respective rooms available for sale are not uniform, among other reasons. As such, the indicators are no more than
the reference figures.
Kobe
Meriken Park
Oriental Hotel
Ratio tototal sales
(%)

Namba
Oriental Hotel

Oriental Hoteltokyo bay
Ratio tototal sales(%)

Hotel Nikko
AlivilaRatio tototal sales(%)

Oriental Hotel
Hiroshima

Ratio tototal sales(%)

Ratio tototal sales(%)

The Five HMJ
HotelsTotal/Average
Ratio tototal sales(%)

Occupancy rate

40.7%

-

36.7%

-

26.8%

-

29.2%

-

76.6%

-

39.5%

-

ADR
(Note 1)

17,680-13,849

-

6,186

-

25,258

-

8,811

-

14,471

-

7,188

-

5,076

-

1,659

-

7,384

-

6,746

-

5,715

-

RevPAR(Note 2)
Total sales

2,820

100.0

2,103

100.0

775

100.0

2,275

100.0

993

100.0

8,966

100.0

Rooms department

847

30.1

947

45.0

156

20.1

1,070

47.0

559

56.3

3,579

39.9

Food & beveragedepartment

1,548

54.9

562

26.7

5

0.6

643

28.2

137

13.8

2,895

32.3

Tenant department

70

2.5

112

5.3

567

73.1

2

0.1

5

0.5

757

8.4

353

12.5

482

22.9

48

6.1

560

24.6

293

29.5

1,735

19.4

41

1.5

(53)

(2.5)

317

40.8

213

9.4

334

33.6

851

9.5

Other departments(Note 3)
GOP

Oriental Hotel
Sheraton Grand
Oriental Hotel
Holiday Inn Osaka
Okinawa Resort & Hiroshima Hotel
Fukuoka Hakata
Namba
Spa
(Note 5)
Station(Note 4)
Ratio toRatio toRatio toRatio tototal sales
total sales
total sales
total sales
(%)
(%)
(%)
(%)
Occupancy rate

Hilton Tokyo
Narita Airport
Ratio tototal sales(%)

International
Garden Hotel
NaritaRatio tototal sales
(%)

26.5%

-

31.5%

-

44.8%

-

37.5%

-

45.0%

-

54.8%

-

19,948-21,173-

10,446

-

3,273

-

11,354

-

7,504

-

RevPAR(Note 2)

5,284

-

6,673

-

4,678

-

1,228

-

5,104

-

4,109

-

Total sales

1,296

100.0

1,558

100.0

999

100.0

175

100.0

1,655

100.0

1,005

100.0

696

53.7

580

37.2

377

37.8

141

80.5

1,021

61.7

694

69.1

288

22.2

853

54.8

307

30.7

-

-

421

25.4

231

23.0

Tenant department

39

3.0

-

-

208

20.9

31

17.7

22

1.4

2

0.2

Other departments(Note 3)

273

21.1

125

8.1

106

10.6

3

1.7

191

11.5

78

7.7

(237)

(18.3)

235

15.1

251

25.2

77

44.0

101

6.1

299

29.8

ADR
(Note 1)Rooms department
Food & beveragedepartment

GOP- 50 -

Hotel Oriental
Express
Hilton Tokyo Odaiba
Osaka Shinsaibashi(Note 4)
Ratio toRatio toRatio tototal sales
total sales
total sales
(%)
(%)
(%)

Hotel Nikko Nara

The HMJ Group
HotelsTotal/Average(Note 6)
Ratio tototal sales(%)

Occupancy rate

24.8%

-

-

-

41.4%

-

38.5%

-

ADR
(Note 1)

12,500---28,582-

14,068

-

3,103

-

-

-

11,843

-

5,413

-

Total sales

916

100.0

1

100.0

4,505

100.0

21,078100.0

Rooms department

374

40.8

-

-

1,958

43.5

9,421

44.7

Food & beveragedepartment

443

48.4

-

-

1,857

41.2

7,295

34.6

Tenant department

5

0.5

-

-

79

1.7

1,143

5.4

Other departments(Note 3)

94

10.3

1

100.0

612

13.6

3,220

15.3

(100)

(10.9)

(21)

-

594

13.2

2,050

9.7

RevPAR(Note 2)

GOP
(Note 1)

ADR: Represents average daily rate, which is calculated by dividing total rooms revenue for a certain period (including service charges)
by the total number of rooms sold during the period.
Service charges are 10% for Kobe Meriken Park Oriental Hotel, Oriental Hotel tokyo bay, Namba Oriental Hotel, Hotel Nikko Alivila,
Oriental Hotel Hiroshima, Oriental Hotel Okinawa Resort & Spa, ACTIVE-INTER CITY HIROSHIMA (Sheraton Grand Hiroshima
Hotel), International Garden Hotel Narita, Hotel Nikko Nara and Oriental Hotel Fukuoka Hakata Station; 12% for Hilton Tokyo Narita
Airport; and 13% for Hilton Tokyo Odaiba. Holiday Inn Osaka Namba and Hotel Oriental Express Osaka Shinsaibashi do not request(Note 2)

service charges. The same shall apply hereinafter.
RevPAR: Represents revenue per available room, which is calculated by dividing total rooms revenue for a certain period (including(Note 3)service charges) by the total number of rooms available for sale during the period. The same shall apply hereinafter.
Figures for the other departments include sales of the department for sale of goods.

(Note 4)Due to the impact of the spread of the infection by COVID-19, the temporary closure was implemented for certain period during theperiod. However, the occupancy rate is calculated including the closure period.

(Note 5)(Note 6)The indicated figures are for Sheraton Grand Hiroshima Hotel, the main facility of ACTIVE-INTER CITY HIROSHIMA.
For Total/Average of the HMJ Group Hotels, figures are calculated by JHR as reference since no figures have been provided by the hotel(Note 7)lessees.
The occupancy rate is rounded off to one decimal place, while ADR and RevPAR are rounded off to the nearest whole number. Sales and
GOP are rounded off to the nearest million yen. For the ratio to total sales, the ratio of sales in each department to total sales is rounded
off to one decimal place.

- 51 -

(2) Status of capital expenditures
a. Planned capital expenditures (Note)
The following table shows major estimated capital expenditures items for renovation work planned as of the end of the fiscal
year under review. Expenditures are expected to total ¥4,762 million, which consists of capital expenditures of ¥4,751 million(Note) and repair expenses of ¥10 million, for the next fiscal year.
Estimated construction
costs
Name of property, etc.
(JPY 1M)
PurposeScheduled period(Location)
Total
Total amountamount paid
Kobe Meriken Park Oriental Hotel(Kobe-shi, Hyogo)
Kobe Meriken Park Oriental Hotel(Kobe, Hyogo)
Hotel Nikko Alivila(Nakagamigun, Okinawa)
Oriental Hotel Universal City
(Osaka-shi, Osaka)
Hilton Tokyo Bay(Urayasu-shi, Chiba)
Oriental Hotel Okinawa Resort & Spa(Nago-shi, Okinawa)
Oriental Hotel Okinawa Resort & Spa(Nago-shi, Okinawa)
Oriental Hotel Okinawa Resort & Spa(Nago-shi, Okinawa)
Oriental Hotel Okinawa Resort & Spa(Nago-shi, Okinawa)
Oriental Hotel Okinawa Resort & Spa(Nago-shi, Okinawa)
ACTIVE-INTER CITY HIROSHIMA(Hiroshima-shi, Hiroshima)
Hotel Oriental Express Fukuoka Tenjin(Fukuoka-shi, Fukuoka)

Renovation of prefabricated bathrooms
in guest rooms

From May 2022
to June 2022
From March 2022
Renovation of executive rooms
to March 2022
From February 2022
Renewal of elevator equipment
to November 2022
From January 2022
Renovation of guest rooms, etc.
to July 2022
From November 2022
Renewal of elevator equipment
to December 2022
Renewal of air-conditioning equipment From February 2022
in guest rooms
to December 2022
From February 2022
Renewal of guest room piping
to December 2022
From June 2022
Painting of exterior walls
to December 2022
From December 2021
Renovation of lobby and pool area
to March 2022
From June 2022
Renovation of guest rooms
to December 2022
Renovation of sixth floor lobby andFrom February 2022
lounge area
to April 2022
From February 2022
Renewal of heat sources
to April 2022
Total

(Note)

75

-

100

-

151

-

752

7

72

-

260

-

200

-

70

-

436

16

264

-

100

-

62

-

2,544

23

New construction and renewal work include those for buildings, attached facilities, etc. as well as items classified as furniture and fixtures. The
scheduled period of the above planned renovation work and whether the renovation work will be performed may change.

b. Capital expenditures during the period (Note)
Major construction work conducted by JHR during the fiscal year under review that represents capital expenditures is as below.
Capital expenditures for the fiscal year under review totaled ¥3,367 million, and repair expenses that were accounted for as
expense in the fiscal year under review totaled ¥30 million. In aggregate, ¥3,397 million of construction work was carried out.
Name of property, etc.
Construction costs
Purpose
Period(Location)(JPY 1M)
Kobe Meriken Park Oriental Hotel
Renovation of prefabricated bathrooms
From April 2021
57
(Kobe, Hyogo)
in guest rooms
to July 2021
Dormy Inn Kumamoto
From March 2021
Renewal of air-conditioning equipment
80(Kumamoto-shi, Kumamoto)to July 2021
Oriental Hotel Universal City
From April 2021
Renovation related to rebranding822
to December 2021
(Osaka-shi, Osaka)
Hotel Oriental Express Fukuoka Tenjin Renewal of heat-source equipment for
From April 2021
67
(Fukuoka-shi, Fukuoka)
air conditioning facilities
to June 2021
Hotel Oriental Express Fukuoka Tenjin
From April 2021
Renovation of guest rooms, etc.
366
(Fukuoka-shi, Fukuoka)
to July 2021
Hilton Tokyo Odaiba
From March 2021
Renewal of central monitoring device
63(Minato-ku, Tokyo)
to June 2021
Total
(Note)

1,457

New construction and renewal work include those for buildings, attached facilities, etc. as well as items classified as furniture and fixtures.

- 52 -